A class action lawsuit lets several plaintiffs seek compensation from a defendant for similar claims. Other class members, lead plaintiffs, and the lawyers split the settlement money. Different factors decide the distribution of the settlement among every class member. Understanding these factors will enable plaintiffs to set reasonable expectations.
“How is settlement money divided?” is one important question that arises in cases like this. The answer depends on the factors we’ll discuss in this article. We need to mention that the lead plaintiffs usually get the largest compensation, while others get varying amounts according to their claims. The factors that affect the compensation received in a class action lawsuit are discussed in the next sections.
The Number of Class Members
The total number of plaintiffs influences every person’s compensation. Should a case involve many class members, the compensation has to be split among them. Smaller payouts for each person are usually the outcome in such cases. Therefore, the fewer the plaintiffs, the larger the individual payouts.
The Role of Lead Plaintiffs
Lead plaintiffs actively engage in the lawsuit, including case filings and courtroom attendance. Their participation results in higher compensation than that of other class members. Their injuries are usually way worse, so they get more money for it. The money that regular class members get changes based on how much they lost.
The Severity of Damages
The amount of money each person gets depends on how much they got hurt. People who get really hurt or lose a lot of money usually get more money. People who get hurt a little usually get less money for it. The court makes sure everyone gets paid fairly based on their own situation.
Legal Fees and Costs
Class action lawsuit lawyers only get paid if you win the case. This means they get their money from the settlement. They take out their fees and legal costs first, and then the rest of the money gets split among everyone in the class. When legal costs are super high, there’s not much money left for people who are suing.
Strength of the Evidence
If they have really good evidence for their claim, it could help them get more money. You can use things like medical records, bank statements, or product receipts to prove your point. If you make weak claims, you might get less money or even not be part of the settlement at all. Fair distribution is super important in courts, and it all depends on the evidence.
The Defendant’s Financial Situation
The defendant’s capacity to pay also affects settlement amounts. A financially strong defendant could consent to a larger settlement. On the other hand, a struggling business may negotiate a smaller payout. Sometimes, rather than as a lump sum, settlements are paid over time.
Court-Approved Distribution Plans
The court reviews and approves the distribution plan during a hearing before a settlement is finalized. Judges make sure that every class member would find the conditions of the settlement fair. Though the judge has the final say, class members may object to the distribution plan. The goal is to achieve a fair distribution of funds.
Involvement in the Lawsuit
Not every member of the class receives payments automatically. Certain settlements call for claimants to provide documentation or fill out forms. Those that drop out of the process might not get compensation. Courts set deadlines for submitting claims, and late claims may be dismissed.
Potential Deductions or Reductions
Certain settlements include deductions for taxes, administrative expenses, or claim payback. These reductions reduce the total amount that can be distributed. Plaintiffs should find out about these possible deductions to enable them to properly estimate their potential payout.
Type of Settlement Agreement
While some settlements are paid over time, others are paid in one lump sum. Cases involving significant amounts often involve structured payments. Though they may result in lower amounts per person, lump sum contributions offer immediate compensation.
