Class actions are complex and lengthy. They require large numbers of lawyers, industry-specific experts and attorney familiar with the legal and factual issues involved. Most importantly, because class actions are almost always litigated on a contingency basis – meaning that the lawyers who file the action are not paid and their expenses are not reimbursed unless they prevail – an obvious question is how do the lawyers get paid and their expenses get reimbursed.
Generally speaking, class action lawyers are paid from the recovery they obtain for the benefit of the class. That is because class actions are filed on behalf a class and its members. When the class action lawyers obtain a recovery for the benefit of the class, the attorneys whose efforts resulted in that recovery are entitled to a portion of it as compensation and for the reimbursement of their expenses. In certain instances, the defendants will separately negotiate a fee for the class action lawyers that is separate and apart from the recovery for the class. Also, the expenses that the class action lawyers advanced in prosecuting the class action – to pay for court charges, travel expenses, expert witness fees, etc. – are also reimbursed.
However, no matter how the class action lawyers are paid and their expenses reimbursed, the court must approve the payments. This is normally done when the class action is resolved. The court will require that each class member receive a notice detailing exactly how much the class action lawyers are seeking for their fees and expense reimbursements. The court will allow class members to express their opinion about whether such requests are appropriate and will separately determine how much to ultimately award class counsel.
In determining how much to ultimately pay class counsel, the court will look to several factors, including the amount of the recovery, the quality of the work, the time spent litigating the case and the risk undertaken in litigating the action without any promise of payment.