How Class Action Lawyers Make Money

Class action lawsuits are often complex, drawn-out processes that require the expertise of many lawyers and industry experts. Class action lawsuits are used to give large groups of people access to courts when the case would be too large or expensive for any single person to take on by themselves.

Since class action lawsuits represent many people, that begs the question: who pays the fee for class action lawyers, and how do they make their money? In today’s post, we break down what a class action lawsuit is and how class action lawyers make money.

What Is A Class Action Lawsuit?

We’ve all heard stories about big corporations taking advantage of consumers with misleading advertising or products that could cause bodily harm without sufficiently warning the public. But since corporations are armed to the teeth with legal teams, they are extremely difficult to battle in court. If a large corporation has wronged you somehow, you don’t have very many routes you can take to get the justice you deserve. That’s where class action lawsuits come into play.

Class action lawsuits give everyday people the opportunity to unite with a common grievance against a party that has caused them similar problems. It’s the only realistic method of bringing justice to a cause because it allows a group of people to have sufficient access to courts and legal resources when it would be too complicated and expensive for anyone to take on the fight individually.

How Do Class Action Lawyers Make Money?

Wins and Settlements

Class action lawyers are paid if the case is won or a settlement has been agreed upon. The amount is typically determined as a percentage of what the plaintiff Class has been awarded. How much they are paid depends on the specifics of each case, but the Court must approve any agreement with respect to legal fees in a class action.

The worst thing that could happen to the plaintiffs in a class action lawsuit would be to have been taken advantage of by a big corporation and then taken advantage of again by a law firm with predatory fees. In order to stop this from happening, the Courts need to approve the legal fees of the counsel (the law firm) to ensure the plaintiffs aren’t being taken advantage of and the fees are fair and reasonable.

Because law firms are the party that assumes the financial risks of class action lawsuits, not individual members of the Class, they will often only take on cases with a reasonable path to victory.

What Happens If The Case Is Lost?

Every class action lawsuit is different, but they are generally extremely complicated and can take years to resolve. The typical class action lawsuit takes around two or three years to get wrapped up. So what happens to a law firm that has spent years and hundreds of thousands or millions of dollars working on a losing case?

Fortunately for the individual plaintiffs, because law firms are the party to take on the financial risk, there is no worry about paying huge legal fees if the case is lost. However, law firms aren’t so fortunate, making them wary of taking on harder-to-win cases, as was brought up earlier. This is an unfortunate reality of our legal system, where fighting for justice can be such a financial risk that law firms aren’t always willing to take on class action lawsuits that are difficult to win, but that’s how it works right now.

Summary

Class action lawsuits happen when a group of people band together and get legal representation to sue a single party that has caused similar suffering to the plaintiffs. The Class is represented by lawyers who deem the case winnable and are willing to assume the financial responsibility of fighting in Court. Class action lawyers get paid a percentage of the money awarded to the Class if the case is won or settled.