Class-action lawyers typically keep about 25% of the settlement fund. A federal judge must approve that amount as reasonable before anyone gets paid. A common fund is the pot of money a defendant pays to settle claims for the whole class. The fee comes from that pot, not as an extra charge to you.
Official resources:
- Read the official notice from Uscourts — Use this primary source to verify the official announcement.
- Read the official notice from Uscourts — Use this primary source to verify the official announcement.
Table of Contents
- Who decides the fee?
- How do judges calculate fees?
- What share do lawyers usually keep?
- Why do megafunds pay a smaller percent?
- What else reduces your payment?
Who decides the fee?
Federal judges decide what class lawyers get paid. The Cornell Legal Information Institute's Rule 23 text states the standard. Courts may award only reasonable fees and costs by motion, with written findings.
Class members get notice of the fee request. They can object at a fairness hearing before the judge approves it, according to a Thompson Coburn summary of Rule 23 practice. The judge then issues findings of fact and conclusions of law.
How do judges calculate fees?
Courts use two main methods. In common-fund cases they often award a percentage of the fund. In other cases they use the lodestar method. The lodestar multiplies reasonable hours by reasonable rates.
Judges may add a multiplier or use it as a cross-check. The U.S. Court of Appeals for the Eleventh Circuit describes both uses in its opinion filed Jan. 5, 2022.
What share do lawyers usually keep?
Professor Brian Fitzpatrick studied every federal class settlement in 2006-2007. His SSRN abstract for the Journal of Empirical Legal Studies article reports fees averaged and mediated about 25%. Awards most often landed at 25%, 30% or 33%. In later declarations Fitzpatrick reported more detail. Nearly two-thirds of awards fell between 25% and 35%, with a 25.4% mean and 25% median.
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Lodestar was used in only about 12% of settlements. The Ninth Circuit uses 25% as the benchmark, per FindLaw's page for Williams v. MGM-Pathe. That page also states the fee base is the entire fund created for the class. It applies even if members never claim part of it and money reverts to defendants.
Why do megafunds pay a smaller percent?
Percentages fall as cases get bigger. Above about $72.5 million the mean was 18.4% and median 19%. The U.S. Court of Appeals for the First Circuit discussed that pattern in its State Street opinion filed Feb.
9, 2022. The smaller share still means more dollars. A 25% fee on a $10 million fund is $2.5 million. An 18% fee on a $200 million fund is $36 million.
What else reduces your payment?
Fees are not the only deduction. Litigation expenses, administration costs, and plaintiff awards come on top of fees. For coupon settlements, the Cornell Legal Information Institute's page for 28 U.S.C. 1712 ties coupon-based fees to coupons actually redeemed, with a lodestar alternative.
Check the settlement notice soon after you get it. It lists the requested amounts and the objection deadline. Add up those deductions to estimate the net fund. Mark the objection deadline on your calendar and file in writing if the fee looks excessive.
- Fee percent and dollar amount requested
- Expenses, admin costs, and incentive awards
- How to file an objection before the hearing
- Claim deadline and payment formula for members
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