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Facial recognition startup\u00a0Clearview AI<\/a>\u00a0reached a settlement Friday in an Illinois lawsuit alleging its massive photographic collection of faces violated the subjects\u2019 privacy rights, a deal that attorneys estimate could be worth more than $50 million.<\/p>\n But the unique agreement gives plaintiffs in the federal suit a share of the company\u2019s potential value, rather than a traditional payout. Attorneys\u2019 fees estimated at $20 million also would come out of the settlement amount.<\/p>\n Judge Sharon Johnson Coleman, of the Northern District of Illinois, gave preliminary approval to the agreement Friday.<\/p>\n The case consolidated lawsuits from around the U.S. filed against Clearview, which pulled photos from social media and elsewhere on the internet to create a database it sold to businesses, individuals and government entities.<\/p>\n The company\u00a0settled a separate case<\/a>\u00a0alleging violation of privacy rights in Illinois in 2022, agreeing to stop selling access to its database to private businesses or individuals. That agreement still allowed Clearview to work with federal agencies and local law enforcement outside Illinois, which has a strict digital privacy law.<\/p>\n Clearview does not admit any liability as part of the latest settlement agreement.<\/p>\n \u201cClearview AI is pleased to have reached an agreement in this class action settlement,\u201d James Thompson, an attorney representing the company in the suit, said in a written statement Friday.<\/p>\n The lead plaintiffs\u2019 attorney Jon Loevy said the agreement was a \u201ccreative solution\u201d necessitated by Clearview\u2019s financial status.<\/p>\n \u201cClearview did not have anywhere near the cash to pay fair compensation to the class, so we needed to find a creative solution,\u201d Loevy said in a statement. \u201cUnder the settlement, the victims whose privacy was breached now get to participate in any upside that is ultimately generated, thereby recapturing to the class to some extent the ownership of their biometrics.\u201d<\/p>\n It\u2019s not clear how many people would be eligible to join the settlement. The agreement language is sweeping, including anyone whose images or data are in the company\u2019s database and who lived in the U.S. starting in July 1, 2017.<\/p>\n A national campaign to notify potential plaintiffs is part of the agreement.<\/p>\n The attorneys for Clearview and the plaintiffs worked with Wayne Andersen, a retired federal judge who now mediates legal cases, to develop the settlement. In court filings presenting the agreement, Andersen bluntly writes that the startup could not have paid any legal judgment if the suit went forward.<\/p>\n \u201cClearview did not have the funds to pay a multi-million-dollar judgment,\u201d he is quoted in the filing. \u201cIndeed, there was great uncertainty as to whether Clearview would even have enough money to make it through to the end of trial, much less fund a judgment.\u201d<\/p>\n But some privacy advocates and people pursuing other legal action called the agreement a disappointment that won\u2019t change the company\u2019s operations.<\/p>\n Sejal Zota is an attorney and legal director for Just Futures Law, an organization representing plaintiffs in a California suit against the company. Zota said the agreement \u201clegitimizes\u201d Clearview.<\/p>\n \u201cIt does not address the root of the problem,\u201d Zota said. \u201cClearview gets to continue its practice of harvesting and selling people\u2019s faces without their consent, and using them to train its AI tech.\u201d<\/p>\n<\/div>\n\nSubscribe to the Fortune Next to Lead newsletter to get weekly strategies on how to make it to the corner office. Sign up for free<\/a> before it launches on June 24, 2024.<\/div>\n