How are lawyers paid in a class action lawsuit?
Normally, class actions are handled on a contingent basis similar to how personal injury fees are handled. This means that unless there is a recovery, the plaintiff is not responsible for attorney’s fees. Often, the attorney’s fees are taken out of the gross recovery for the class though, unlike personal injury cases where the fee may be 33-40%, percentage fees in class actions traditionally are between 15-30%. This may slightly reduce the recovery of each class member. Frequently, the defendant will agree to pay attorney’s fees up to certain amounts over and above the settlement benefits to the class. This is an added benefit to the class.
Attorney fee awards in class actions are subject to court review and approval. Courts look at numerous factors in determining a fair fee for class counsel. Among these factors, courts may look at the amount of time and expense advanced by counsel, the difficulty of the case, the stage of the case when settled, the result obtained and many others. The attorneys normally petition the court for fees and the court holds a hearing to determine what fee will be awarded.