Who "wins" class action lawsuits?

 

I believe corporations and other entities should be held legally accountable. Sometimes the only way to do that is with a lawsuit. At times, single lawsuits wouldn't work, and similarly aggrieved people must band together. This is what happens in a class action lawsuit, which allows representative plaintiffs to act as plaintiffs for their particular class. There are often multiple classes in a federal class action lawsuit. This is true in some state class actions as well. The settlements are often tens of millions of dollars, sometimes hundreds of millions of dollars. What do the class members get for all of this?

Not much. Between $13-$90 per person according to a 2019 empirical analysis done by Reuters.

And what is the size of the average class action settlement? $56.5 million. Furthermore, the median claims rate (according to the FTC) is 9%. Contrast that with the average personal injury settlement where the average settlement is $60,000 plus. Usually this would mean $20,000 for the medical bills, $20,000 for the client to walk away with, and $20,000 for the lawyer. Now, the standard fee is 40% if a lawsuit is filed, but, if the lawyer can resolve it without a bunch of time and costs, then it can be a good idea to split 1/3 1/3 1/3.

What do lawyers make in class action lawsuits? Well...the defense lawyers make hundreds of thousands of dollars defending these massive lawsuits, and the plaintiffs lawyers get between 35-40%  of the total recovery on average. The more claims that are filed the smaller the payout for the class members. Lawyers can elect to take a percentage or they can multiply their hourly rate times the hours they worked, and there is a formula that's applied. In larger states it's not unusual for lawyers to bill exorbitant rates ($500-$1,000). It's great for the lawyers, but most of the money goes to ID protection and credit monitoring neither of which help much.

So...what do you do when you hear lawyers talking about "truth, justice" and all those inflated and meaningless words in the context of many class actions? I'd be skeptical.