A class-action lawsuit is a civil litigation by multiple people against large corporations. In a class-action lawsuit, many plaintiffs who have been harmed by the same liable party file a unified lawsuit to recover damages for their injuries, loss, or psychological distress.
By using their strength in numbers, they stand a greater chance of winning a case than if they had pursued litigation separately. While the rules governing class actions vary from state to state and court to court, some common themes apply to class action lawsuits throughout the country.
After a Class Action Lawsuit Settles
After the presiding judge reviews the settlement offer in a class-action lawsuit and determines that it is fair and adequate compensation, the settlement amount is divided. Depending on their participation in the class action lawsuit, the lead plaintiff receives their percentage first.
Since the lawyers typically work on a contingency basis, they would also receive a percentage for their legal fees and related costs. To ensure fairness, the court usually restricts the lawyers’ payment to a reasonable amount.
Finally, the rest of the settlement money in a class-action lawsuit is divided among the class members.
Who Gets the Most Money in a Class Action Lawsuit?
Attorneys will take a percentage from the settlement to cover their legal fees. However, the court will ensure their payment is restricted to a sensible amount.
Contrary to popular belief, class action settlements are not divided among class members evenly. Lead plaintiffs receive the most money in class action lawsuits. They typically have the worst injuries and the highest damages.
How Is a Class Action Lawsuit Paid Out?
If your class action lawsuit is successful, you will receive a portion of the settlement or court award. Plaintiffs are paid by a lump-sum payment or a structured settlement. Smaller payouts are usually dispersed as a single payment.
Do You Pay Taxes on a Class Action Settlement?
Proceeds from class action lawsuits are treated the same as any other lawsuit settlement. Settlements or court awards for injury and sickness are non-taxable so long as the claimant does not deduct related medical expenses on their tax returns.
How Much Do Plaintiffs Get in Class Action Lawsuits?
Class action lawsuits typically involve high-profile defendants facing a multitude of plaintiffs claiming injury. Even though these lawsuits sometimes settle for millions of dollars, a plaintiff’s payout will depend on several factors, including:
- How many lead plaintiffs are involved
- The number of injured plaintiffs
- The total number of class members taking part in the lawsuit
Class members who take part in a class action lawsuit but do not have injuries or evidence supporting their claim, such as receipts for a dangerous product, may receive less than $10.
Benefits of Joining a Class Action Lawsuit
Class actions make the process of seeking damages easier, making it more efficient than if the individual plaintiffs went to trial, according to the Legal Information Institute (LII). The Balance Small Business lists the following additional benefits of joining a class action.
No Out-of-Pocket Expenses
The lawyers typically cover the cost of the litigation and do not charge any legal fees until they win the case and collect the settlement. When this happens, they spread the cost of the lawsuit among the plaintiffs and deduct the total from the settlement amount. Class action lawsuit plaintiffs do not pay legal fees out of pocket.
No Stress for Class Members
In every class action lawsuit, there is a lead plaintiff or lead plaintiffs who serve as the face and voice of the group and represent the interest of the whole group. Due to their active participation, the rest of the members play a passive role and simply await judgment.
Minor Injuries Are Included
It is no secret that the severity of your injuries plays a significant role in personal injury lawsuits. And while it is unfair, many people have seen lawyers reject their cases because their injuries were minor. But in class actions, due to the strength in numbers, you can still hold the negligent party accountable and receive compensation.
Justice Is Attainable
Class action lawsuits reduce the number of cases clogging the court system. All plaintiffs need is one lawsuit, one court, and one single decision for all.
Also, class action lawsuits motivate the defendants and insurers to settle due to the number of plaintiffs. It is much harder to use defense tactics against several people claiming similar damages.
Reasons for Smaller Settlements in Class Action Lawsuits
Class action lawsuit settlements are not divided evenly. Some plaintiffs will be awarded a larger percent while others receive smaller settlements. There are legitimate reasons for class members receiving smaller payouts. A few of these include:
- The severity of injuries: One advantage of joining a class action lawsuit is that it allows plaintiffs to seek damages for minor injuries that would not warrant a lawsuit by themselves. In cases like this, the liable parties would still settle for their negligence, but the payout would be relatively small.
- Cost of the litigation: Class action lawsuits can be very expensive, especially when going up against entities that have a lot of money to throw into their defense. Since most personal injury law firms operate on a contingency basis, the law firm bears every cost until the case is settled.
- Legal roadblocks: Any issue with the case that cannot be solved can affect the settlement amount. Also, if the defendant has an airtight case, the plaintiffs’ legal team may have no choice but to concede to avoid losing outrightly.
How to Ensure That You Are Fairly Compensated
In class action lawsuits, before the case can be closed, the court holds a fairness hearing to ensure that the class members agree with everything thus far. If you have any objections to the proposed settlement, you must notify the court of your objections at the hearing.
Per the laws regulating these lawsuits, the presiding judge cannot approve the settlement until they are convinced that each plaintiff is being treated fairly.
The purpose of a class action lawsuit is to fight for those who are wrongfully hurt due to the negligence of others. If you would like to join a class action lawsuit or have concerns about an ongoing one, you may need the legal counsel of a lawyer.