There has been an undeniable trend toward the use of victim compensation funds to provide rapid remuneration to large numbers of people affected by disaster. Many of these funds have common traits, including the fact that court or governmental agencies have appointed a special master, usually Kenneth Feinberg, to independently oversee these funds. The General Motors Ignition Compensation Claims Resolution Facility, however, recently took this concept a step further and, on its own authority, hired Feinberg and created a private compensation fund for victims injured or killed by their defective ignition switches.

GM’s idea to handle disputes outside of the courtroom to avoid collective litigation is not a new concept. Defense-operated, mass-settlement programs, coined “corporate settlement mills,” or CSMs, by legal scholars Diane Remus and Adam Zimmerman, associate professors of law at North Carolina School of Law and Los Angeles Loyola Law School, respectively, have been around for two decades and have their genesis in the “no-fault” system. The existence of these programs presents a Gordian knot of concerns that should be carefully unraveled by lawyers to determine whether CSMs comport with standards of justice, particularly because formation of corporate defendant-formed CSMs may be seen as a sidestepping of the Seventh Amendment. Given that CSMs will most likely continue into the foreseeable future, lawyers should push for sound regulation that forces defendants to be accountable to victims. Finally, lawyers must also insist on the implementation of public oversight and transparency in order to protect the rule of law.

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