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Quick Summary
- Class actions are complex cases, and you should only hire outstanding lawyers.
- The plaintiff usually doesn’t have to pay anything for joining a class action claim.
- Legal fees for class action lawsuits are typically calculated as a percentage of the total amount recovered for the class, usually ranging from 20% to 35%.
- Joining a class action can give plaintiffs strength in numbers, often leading to a higher chance of compensation and reduced individual legal costs.
Recent Trends in Class Action Lawsuits (2023-2024)
- In 2023, class action and government enforcement lawsuits collectively garnered over $50 billion in settlements, indicating a significant increase in the financial stakes associated with these cases.
- The total settlements for class actions in 2023 reached approximately $4.4 billion, marking the highest annual payout in over a decade.
- All top 10 settlements in 2023 surpassed $100 million, which is notable as it was the first time this has occurred within the last decade.
- There's an increasing trend towards larger settlements, suggesting that class action lawsuits are becoming more impactful and potentially more costly for defendants.
- The legal landscape continues to evolve, with courts closely scrutinizing attorney fees and ensuring they are fair and reasonable to the settlement amounts.
How Much Does a Class Action Lawsuit Cost?
A class action lawsuit doesn’t cost anything, i.e., it’s free to join. However, you should consider joining a class action or filing an individual claim.
In some cases, individuals get notified of a pending class action lawsuit, and they are made aware of having a claim.
However, if your damages are greater than the losses of other participants in the class action lawsuit, you may consider not joining or opting out of class action and filing your own claim.
Remember that if you’re a part of class action lawsuits, you won’t be able to pursue further legal action for the same cause once the class action is finished. This may limit the damages you get.
In 2023, class action lawsuits and government enforcement lawsuits collectively garnered over $50 billion in settlements, indicating a significant increase in the financial stakes associated with these cases.
The total settlements for class actions in 2023 reached approximately $4.4 billion, marking the highest annual payout in over a decade [1].
Comparison of Costs and Benefits: Class Action Lawsuit vs. Individual Lawsuit
Understanding the financial implications of joining a class action lawsuit versus filing an individual lawsuit is crucial for potential plaintiffs.
Here’s a comparison table that outlines the costs and benefits associated with each option:
| Aspect | Class Action Lawsuit | Individual Lawsuit |
|---|---|---|
| Cost to Plaintiff | Usually, there are no upfront costs; legal fees are taken from the settlement amount | May require upfront costs for filing fees, attorney fees, and other expenses |
| Legal Fees | Typically 20% to 35% of the total recovery for the class | Attorney fees can be hourly or a flat rate, often resulting in higher overall costs |
| Potential Settlement Amount | Settlements may be smaller per individual due to shared recovery | Potentially larger settlements or awards, but varies greatly depending on the case |
| Time to Resolution | Often longer due to multiple plaintiffs and legal complexities | May be resolved more quickly if the case is straightforward |
| Risk Sharing | Risks and costs are shared among all plaintiffs | Individual bears all risks and costs associated with the lawsuit |
| Publicity and Attention | Can attract significant media attention, raising awareness of the issue | May receive less public attention unless it’s a high-profile case |
| Collective Power | Greater collective power against large corporations | Individual lawsuits may lack the same leverage against powerful entities |
By understanding these factors, you can better evaluate which option aligns with your personal circumstances and goals.
Class Representative and Class Action Lawsuit Expenses
A class representative is a victim of wrongdoing. This person hires a law firm and files the lawsuit. Class action lawyers represent the class representative. They must certify the claim in court and build a class of plaintiffs who suffered the same damages as the class representative.
The class representative represents all class members in court and during settlement negotiations. This is important because the class representative may have to pay certain fees related to the case, including legal fees and attorney's fees.
So, while it’s free for potential class members to join class action litigation, this isn’t the case with the class representative.
However, the standard practice is that the class representative will get reimbursed for the fees and court costs they paid during the class action when the case settles.
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Does a Plaintiff Pay the Lawyer in a Class Action Lawsuit?
The plaintiff doesn’t pay a lawyer in a class action lawsuit. Normally, either the class representative or, more commonly, the law firm will cover all costs.
The plaintiffs don’t have to pay anything until the court awards the settlement.
Once the court awards the settlement, the lawyers will include all the costs incurred during a class action lawsuit in their fees. The lawyer’s fee will be deducted from the settlement at the end of the case.
The exact cost of claims differs with each case, depending on how long and complex the case is. Overall, class claims need significant financial investment.
The legal team has several disbursements — costs incurred before and after the class action lawsuit starts, such as:
- Perform independent research on the wrongdoings
- Obtain the evidence
- Obtain client records
- Consult expert witnesses
- Long-distance calls
- Courier charges
- Get class certification
- Present the case in court
No Win, No Fee: Understanding Contingency Fees in Class Actions
Another reason why plaintiffs don’t have to pay the attorneys is that the attorneys are paid on a contingency fee basis in the vast majority of class actions.
According to AmericanBar, a contingency fee is when a lawyer is only paid if the class action is successful [2]. The plaintiff won’t lose any money if class actions aren’t successful.
In a contingent fee arrangement, the lawyer agrees to accept a fixed percentage (often one-third) of the recovery, which is the amount finally paid to the client.
If you win the case, the lawyer's fee comes out of the money awarded to you. If you lose, neither you nor the lawyer will get any money, but you will not be required to pay your attorney for the work done on the case.” American Bar Association
In most contingency fee class lawsuits, lawyers receive between 25% to 35% of the settlement. However, this can be higher due to higher legal costs in some complex cases.
Pro tip: Not all law firms have the resources to file class actions, so make sure you hire skilled and outstanding lawyers for your mass tort claim.
Coupon Settlements: A Unique Aspect of Class Action Lawsuits
A coupon settlement is a kind of settlement class members can get when the mass torts are finished. This happens when the lead plaintiff and other class participants get a coupon, not a cash award. The coupon is usually worth a few dollars. This coupon is used as credit in future transitions with the defendant.
While they provide immediate benefits and encourage continued use of a company’s products, the coupons may hold less value than cash. They can come with redemption challenges like restrictions or expiration dates.
Some may also view them as a way for companies to avoid full accountability. Understanding the pros and cons of these settlements can help consumers make informed decisions about participating in such lawsuits.
According to the Class Action Fairness Act, if this happens, the lawyers are usually paid cash fees above the award recovered by claim participants [3].
How is Money Divided in a Class Action Lawsuit?
The court divides the money in a class action lawsuit in most cases. This means the federal court determines how the court costs and attorney fees are to be paid.
As I mentioned, the attorney usually takes a percentage of the total sum awarded to the class representatives and claim members based on the contingency fee basis. Plus, they also take money for expenses incurred during the civil lawsuit.
Then, the money is divided between all plaintiffs. This ensures all participants joining a class action pay for legal fees, and the cost is shared.
However, in the US legal system, a judge can also rule that the defendant has to pay legal fees for the whole class. This usually happens when the settlement is small and isn’t enough to cover both the court and attorneys’ fees.
In 2023, all top 10 settlements surpassed $100 million, which is notable as it was the first time this has occurred within the last decade [4].
The Court Approves the Fees
The court divides the money but also approves the fees. Once the class action is filed, and a settlement is reached, the attorneys’ fees and court costs are decided first. Lawyers are under an ethical obligation to only have fair and reasonable fees.
The court has to approve all attorneys’ fees and also related class action costs. The court can reject the attorney’s fees if they are deemed to be too high. This usually happens when the settlement and the lawyer’s fees are too disproportionate compared to the money the plaintiff will end up getting.
FAQs
Can Legal Fees be Recouped if the Class Action Lawsuit is Successful?
Yes, if a class action lawsuit is successful, the legal fees and costs can be recouped. The fees are typically paid out of the settlement or judgment awarded to the class, often as a percentage of the total amount.
Who Usually Pays the Costs Associated With a Class Action Lawsuit?
The law firm representing the plaintiffs usually pays the costs associated with a class action lawsuit. These costs are then recovered from any settlement or award if the lawsuit is successful.
Are There Any Out-of-Pocket Costs for Participants in a Class Action Lawsuit?
No, there are no out-of-pocket costs for participants in a class-action lawsuit. Legal fees and expenses are usually deducted from the settlement or award at the end of the case.
What Happens If the Class Action Lawsuit is Unsuccessful?
If the class action lawsuit is unsuccessful, participants typically do not incur any costs. The law firm usually absorbs the legal fees and expenses associated with the case, meaning plaintiffs won’t have to pay anything out of pocket.
Is There a Cap on Legal Fees for Class Action Lawsuits?
There is no cap on legal fees for class action lawsuits; however, courts often scrutinize fee arrangements to ensure they are reasonable and proportional to the settlement amount. Some jurisdictions may have specific guidelines regarding attorney fees.
Can Participants Choose Their Own Attorney in a Class Action Lawsuit?
In a class action lawsuit, participants typically do not choose their own attorney. Instead, they are represented by the lead counsel selected by the court or by the group of plaintiffs. However, individuals can opt out of the class action if they wish to pursue their own claims independently.
Related Article: Settlement Reached in Homeopathic Class Action Lawsuit
See the other personal injury lawsuits our attorneys covered so far.
Hire an Experienced Attorney to Help You With Class Action Lawsuits
Class actions are complex cases that require a lot of work on the lawyer's part. However, by joining a class action, you stand to gain compensation for the wrongdoings done to you.
The most important thing is to hire a professional attorney who’s dealt with class claims before.
Schmidt & Clark lawyers have won countless mass torts. Our lawyers know how to obtain a class action certification, perform independent research, and present the claim in court.
Contact us today for a free consultation, and we’ll explain the class action lawsuit cost, as well as your chances of winning the claim.
References:
- https://www.cornerstone.com/insights/reports/securities-class-action-settlements-2023-review-and-analysis/
- https://www.americanbar.org/groups/legal_services/mil
- https://www.govinfo.gov/content/pkg/PLAW-109publ2/html/PLAW-109publ2.htm
- https://www.issgovernance.com/library/the-top-100-us-class-action-settlements-of-all-time-as-of-december-2023/