If there’s one solid truth about class action lawsuits, it’s this: only the attorneys win.
That truth has held out over and over again, especially when it comes to any kind of class action against a search engine. Adding to the list, Yahoo has settled a 2006 lawsuit that claimed it allowed advertisers’ ads to be displayed on a whole host of undesirable web sites:
…Yahoo! breached its contract with its customers by allowing Yahoo! ads to be displayed in spyware, domain name parking sites (also known as bulk registration sites), pop-ups, pop-unders, and typosquatting sites. Plaintiffs brought claims for breach of contract, unjust enrichment, misrepresentation, civil conspiracy, and unfair business practices.
You can argue that without this lawsuit, Yahoo would not have changed its ways–it has agreed to offer a new ad option that restricts ads to Yahoo sites and "premium" distribution partners–but, does anyone really feel like a winner here?
Yahoo simply settled because this was a PITA and it didn’t need this hanging over its head as it moves forward with assimilation by the Borg Microsoft.
What do advertisers get here? Well, you get the promise of better ad targeting on Yahoo Sponsored Search and…well, that’s about it. Unless you are already out of business, then you get $20. That’s not a misprint–you get twenty dollars.
So, who’s the real winner here? The attorneys. Buried at the bottom of the announcement, we find this:
Class Counsel will apply for attorneys’ fees of $4,170,000, plus reimbursement of expenses of approximately $100,000, and for service awards to the three Class Representatives of $10,000 each. Yahoo! has agreed to pay those fees, expenses and service awards, in the total amount of $4.3 million,
You get $20 (at best) the attorneys walk away with $4.3 million!
Don’t get me wrong, there are some great attorneys out there–heck I used to work as a paralegal back in England–but this is craziness. Something needs to be done to prevent attorneys from cashing out on such a large scale. It’s not like these class actions suits end up going to trial. They nearly always get settled–usually with the attorneys being the only real winners.
It’s a sad fact that these class action lawsuits will continue because both sides know that it’s cheaper to settle, than fight this all the way. Even sadder, the spoils tend to go to the one who passed the bar exam.