Risk aversion of class-action lawyers

The two sides in the potentially massive class-action lawsuit by silicon-valley engineers against Google, Apple, and other big tech companies reached an agreement, but that settlement was rejected by the judge. New York Times:

After the plaintiffs’ lawyers took their 25 percent cut, the settlement would have given about $4,000 to every member of the class.

Judge Koh said that she believed the case was stronger than that, and that the plaintiffs’ lawyers were taking the easy way out by settling. The evidence against the defendants was compelling, she said.

(Original court order.)

I would like to be able to explain this by understanding the economic/sociological motivations of the lawyers. People often complain about a huge chunk of the money going to the class-action lawyers who are too eager to settle, but the traditional argument is that a fixed percentage structure (rather than an hourly or flat rate) gives the lawyers the proper incentive to pursue the interests of the class by tying their compensation directly to the legal award. So this should lead to maximizing the award to the plaintiffs.

My best guess, doubtlessly considered by many others, is this: Lawyers, like most people, are risk adverse for sufficiently large amounts of money. (They would rather have $10 million for sure than a 50% chance at $50 million.) On the other hand, the legal award will be distributed over many more plaintiffs. Since it will be much smaller per person, the plaintiffs are significantly less risk adverse. So the lawyers settle even though it’s not in the best interests of the plaintiffs.

This suggests the following speculative solution for correctly aligning the incentives of the lawyers and the class action plaintiffs: Ensure that the person with the final decision-making power for the plaintiff legal team receives a percentage of the award that is small enough for that person’s utility function to be roughly as linear as the plaintiffs’.… [continue reading]

PRISM and the exclusionary rule

I distinctly remember thinking in my high school Gov’t class that the exclusionary rule was weird.  Basically, the idea is that the primary mechanism for enforcing the 4th Amendment’s protection against unjustified searches is that evidence collected in violation of this Amendment cannot be used to convict someone.  But this is weird because (a) it can lead to setting free people guilty of egregious crimes because of minute privacy violations and (b) it offers zero protection against privacy violations by the government for other purposes, such as convicting third parties. I always thought it was kind of missing the point.

(There doesn’t seem to be a good pure check againt privacy violations to be found in the court system.  Right now, you can apparently sue the federal government through the Federal Tort Claims Act for privacy violations, but only if the government agrees.  Similar situations exist with the states.)

Now, as it turns out, problem (b) is front-and-center in the debate over FISC‘s powers.  It’s true that normal criminal courts grant warrants in a non-adversarial setting, just like FISC does.  But tptacek and dragonwriter point out on HackerNews that this is defensible because there is an adversary when this warrant is actually executed, and exclusionary rule can be used to rebuff unjustified warrants.

On the other hand, there is no defendant to challenge the warrant in the case of mass surveillance of the public.  Anyone charged with with a crime as a result of this surveillance cannot claim the exclusionary rule, and people whose privacy was violated cannot (almost assuredly) get compensation.  This second effect is even more true when the government uses the information, not to convict anyone of a crime, but to pursue extra-national goals like hunting terrorists.  … [continue reading]