Who pays legal fees in a class action lawsuit?

When you and dozens, hundreds, or thousands of people file a joint lawsuit against a company or organization in court, the last thing you want is a hefty legal bill under your name. Litigation can get pricey, so it’s only reasonable to wonder if joining a class action lawsuit is worth it financially.

In this guide, we’ll clarify who pays legal fees in a class action lawsuit and when. We’ll also explain how those fees impact class action payouts and what percentages attorneys typically take, so you know what to expect before joining a class action.

Do class members pay legal fees in a class action lawsuit?

When you join a class action lawsuit, you generally don’t have to pay anything out of pocket. The law firm handling the case covers all the costs upfront and gets paid later by taking a percentage of the common fund—a pool of money awarded through a class action settlement or court judgment. This setup is called a contingency arrangement.

But here’s the deal: law firms get paid only if they win the case. If they lose, the lawyers walk away empty-handed and have to cover all the expenses themselves. For you, that means zero financial risk. While you won’t receive any compensation for the harm you’ve suffered if the case fails, you also won’t owe any legal fees.

Although courts usually rely on the contingency approach to determine attorneys’ fees, they may also use the lodestar method. In this case, the court calculates the number of hours the plaintiffs’ lawyers worked on the case and multiplies it by a reasonable hourly rate to get the “lodestar.” The figure can then be adjusted based on the complexity of the case or the level of risk the attorneys took on.

In rare cases, the court may order the defendant to cover the plaintiffs’ legal costs, so the entire settlement is distributed to class members. This approach is known as fee shifting, and while it is possible in United States courts, it’s not the norm.

What percentage do lawyers take on class action?

Law firms handling class action cases typically receive between 25% and 35% of the total settlement or judgment as their fee. This percentage compensates for the substantial time, effort, and resources attorneys invested in winning a class action lawsuit, especially if it’s complex or high-profile.

The exact percentage depends on the risks involved and the financial responsibility the law firm takes on. Since these firms only get paid if they win, their fee reflects the gamble they had to take to help the entire class pursue justice, secure fair compensation, and hold the defendant accountable.

Who determines legal fees in class action lawsuits?

Class action legal fees must be approved by the court to ensure they’re fair and that lawyers don't take an unreasonable share of the settlement. 

To get approval, the class counsel submits a detailed fee request during the preliminary settlement approval hearing, outlining the law firm’s expenses and hours worked on the case. The request also includes a proposed fee percentage along with reasons why that amount is fair and reasonable.

There is no fixed formula for determining a fair legal fee. When reviewing the request, the judge will look at factors such as:

• The amount of work the case required
• Nature and complexity of the case
• The total settlement amount
• The level of risk the lawyers took on

One of the reasons for this court oversight is to prevent “clear sailing” agreements, where defendants agree not to challenge a specific (often generous) amount of legal fees as part of the class action settlement. In other words, the plaintiffs’ lawyers accept a lower payout for the class members in exchange for the defendant’s promise to “sail smoothly” toward an inflated fee.

If the court finds the proposed fee unreasonable, it can reject it. This is exactly what happened in the 2015 Banks et al v. Nissan North America Inc. class action, which involved allegedly faulty braking systems in Nissan vehicles. 

The plaintiff’s attorneys requested $3.4 million in fees, which amounted to around 80% of the total settlement. The judge ruled the proposal unfair since class members wouldn’t have received enough to cover their repair costs.

Can you object to the amount of legal fees in class action lawsuits?

If you believe the lawyers’ fees are too high even after the preliminary court approval, you have the right to object during what’s called a fairness hearing. You don’t need to have been actively involved in the case to speak up. As a class member, you’ll receive a notice explaining how much lawyers are requesting, along with instructions for filing an objection if you disagree with the proposed amount.

For example, in the Price v. Godiva Chocolatier Inc. et al class action lawsuit, one of the plaintiffs objected to the court-approved legal fees, which accounted for about one-third of the total settlement amount. The objection temporarily delayed payments for all class members. After review, however, the court determined that the fee percentage was fair and reasonable and ultimately approved it.

Typical attorney fees in class action lawsuits: Real-life examples

Class action attorney fees typically fall between 25% and 35% of the total settlement, although they can vary depending on the case’s complexity, size, and risk level. Below are a few real-life examples that show how those percentages play out:

How Settlemate helps you claim the money you’re owed

Even after legal fees are deducted, billions of dollars in class action settlement money go unclaimed each year. It’s not because people don't want their share; many simply don’t realize they qualify for a payout or get discouraged by all the paperwork, deadlines, and research involved in filing a claim.

You can avoid this happening to you by signing up for Settlemate. It helps you recover every dollar you’re owed by streamlining the tedious process of manually tracking class action settlements you’re eligible for. 

Settlemate takes over the burden and simplifies the entire claims process with handy features like: 

• Automated scanning: Settlemate constantly checks for settlements you may qualify for by securely scanning your purchase history and emails (with your permission) and checking databases of active class action cases.
• Pre-filled claims: Whenever possible, Settlemate fills out claim forms for you to save you time and ensure accuracy. You can submit the forms in minutes, directly within the app.
• Live updates: Settlemate will send real-time notifications about your claim status, payout estimates, and filing deadlines. You’ll also receive alerts whenever new eligible settlements appear.
• Proof guidance: Settlemate will let you know if a particular claim requires proof and the type of documents you’ll need to submit.

Download the app from the App Store or Google Play now and start recovering money you didn’t even know you were owed. 

Settlemate stands behind the value of your membership with a simple promise: if the verified value you receive in your first year doesn’t cover your subscription costs, we’ll extend your membership so you have more time to recover that value. Learn more about our Value Guarantee.

Frequently asked questions

We’ve answered the most frequently asked questions regarding class action lawsuits and their costs:

How much does it cost to file a class action lawsuit?

Filing a class action lawsuit doesn’t cost you anything upfront. Your lawyer will cover all the expenses and only get paid if the lawsuit is successful. In that case, the court will approve a percentage of the total settlement to go toward legal fees. If the case is lost, you won’t owe your lawyer anything, as they will absorb the loss.

How is the settlement money distributed in class action lawsuits?

The settlement agreement spells out how the settlement money will be divided. After the legal fees are deducted, the remaining funds are distributed among the lead plaintiffs and regular class members. Lead plaintiffs typically receive a larger share because they were more actively involved in the case, while class members either split the money equally or receive a share proportional to the degree of harm they experienced.

How long do you have to wait to receive a settlement payment?

Class actions can take a while to resolve due to their complexity. After the court approves the settlement or delivers a ruling, the payout process begins, and you can expect your payment within a few weeks to several months. The exact timing depends mainly on the number of submitted claims and the settlement administrator's efficiency in processing payments. 

Can you file a class action without a lawyer to avoid legal fees?

It’s not possible to start a class action without legal representation. These cases are complex and require specialized expertise to ensure the class is fairly represented and compensated.

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