Attorneys’ Fees in Class Action Lawsuits

Class-action lawsuits are created to protect consumers who were in some way defrauded out of money from some company that was providing products or services (or were believed to be).

A small team of lawyers stand in court representing the interests of thousands or millions of consumers to achieve a win in the millions of dollars, which of course is supposed to be distributed to all members of the class that brought the lawsuit.

After months or even years of billable hours working this case through, and the win is finally achieved, how do the attorneys get paid at the end?

Very well, it turns out.

A recent study found that attorneys get paid the lion’s share of class-action money, from as little as 85 percent of the amount to as much as more than 99 percent.

Yes, that’s right – for all the class-action cases that we hear about multi-million awards to those who were wronged, those who were wronged are actually paid very little if anything at all. The millions mentioned in the media end up in the pockets of the attorneys – on both sides of the case.

Very few cases ever go to trial, as it makes sense for lawyers to go ahead and settle since they will get most of the money anyway. And in some way lawyers on both sides get paid regardless if the case goes in favor of one side or the other, and a settlement will often account for payment of two sets of attorneys. Even if defendants lose the large majority of these kinds of cases, they never fail to get paid for their work.

Generally, most class-action gcases pay out attorney fees out of the compensation award given to the class is what is called a “common fund.” Judges presiding over a common-law case usually approve the compensatory amount, and it’s usually around 25-33 percent of the totoal award. However, the reason that class members don’t get to distribute 75 percent of the award is because that 25-percent fee applies to each attorney that represents the class. And not many class-action suits feature a single attorney.

There are instances, however, when a court will require the losing side to pay the attorney’s fees for the winning side, which does mitigate the costs that come out of the “common fund.” It is a good idea to find out how attorneys will be paid if you are considering being part of a class-action lawsuit. How payment will be made will likely determine how much compensation the class will actually get in relation to that which each member lost in the first place.

Many law firms make a living on class-action lawsuits. They can put in the work of one client and yet represent thousands or millions of class members, work out a multi-million-dollar award and likely never have to set foot in a trial proceeding.  Class-actions can be a lucrative way to make profit in a law practice, thought it would be best to ensure an ethical way of getting paid so the members of the class get the compensation due them – after all, without those class members, you wouldn’t have an award originally.