Concerns are being raised about the distribution of funds from large settlements, with historical examples suggesting that victims may receive only a fraction of the payout, while lawyers and associated entities benefit substantially. This scrutiny comes in the wake of Meta's recent $18 billion settlement.
In a 2021 nationwide opioid settlement, approximately $2.3 million allocated to 25 towns in New Jersey was reportedly spent on questionable items. These expenditures included $73,000 for a custom Mustang for the Atlantic City police department, nearly $150,000 paid to a nonprofit for identifying broken streetlights in Camden, and $600,000 on "opioid awareness concerts" in Irvington. Some $53 million was reported to be held in municipal accounts without clear allocation.
The settlement terms stipulated that funds should be used to combat addiction and support prevention efforts, yet the reported spending has drawn criticism. Insiders suggest that settlement funds frequently end up benefiting parties other than the intended recipients of the settlements.
In class-action lawsuits, the plaintiffs, who can number in the millions, often receive minimal compensation, while the attorneys representing them accrue significant wealth. In the aforementioned opioid settlement, legal fees reportedly reached $2.3 billion, with one firm, Motley Rice, receiving $396 million. Lawyers in the 1998 tobacco Master Settlement received over $10 billion in fees, with additional funds directed to state-level accounts.
Another strategy observed in settlements involves directing portions of the payout to "charities" that may have political affiliations. A 2010 class action settlement involving Google reportedly allocated no funds to the majority of plaintiffs, with a few receiving token amounts, while lawyers received substantial fees and the remainder was directed to nonprofits.
In 2018, the Obama administration allocated nearly $400 million to nonprofits close to the administration as part of a settlement addressing alleged racism by the Department of Agriculture against Native Americans.
Critics argue that without continuous oversight, a significant portion of funds from large settlements, such as Meta's $18 billion payout, may not effectively reach the individuals or communities they were intended to help. The article suggests that while people harmed by negligence or misconduct deserve restitution, the current structures of class-action litigation and associated governmental relationships can lead to the diversion of funds.