CLASS ACTIONS

HOW ARE ATTORNEYS PAID IN CLASS ACTION CASES?

The class action attorneys are usually paid only if the case is successful, and then in am amount determined by the court to be fair and equitable. The judge responsible for the class action reviews a submission made by the attorneys, called a "fee petition" This petition sets forth in detail the work the attorneys have done on behalf of the class. The court, after giving members of the class an opportunity to make their views known, then enters an order establishing the amount of the judgment or settlement proceeds to be paid to the attorneys.

The amount of the fees courts award is based upon a number of factors, including the quality of the work, the difficulty of the case, the nature of the result, the number of hours the lawyers and their staff spent on the case and the risks involved. In some cases the major benefits are an order compelling a defendant to stop doing things that damaged the class of plaintiffs, such as discontinuing anti-competitive prices, or remedying a violation, such as having a polluter clean up a river. Where the major benefits to the class are in the form of a cash settlement from the defendant(s), very often the court will award approximately 30% of the gross settlement.

WHAT TYPE OF CASES ARE APPROPRIATE FOR CLASS ACTIONS

Class actions are often used to seek monetary damages and other relief resulting from violations of the anti-trust laws (such as price-fixing conspiracies and monopolization cases), securities law violations (such as fraudulent financial statements and market manipulation), consumer fraud, human and civil rights violations, employee benefits disputes, and environmental, toxic and other mass torts (including oil spills, defective products and defective drugs and medical devices). The attorneys representing the lead plaintiffs in effect serve as "private attorneys' general" to assist in the enforcement of Federal and State laws, by representing large numbers of persons injured

HOW DOES A CLASS ACTION WORK?

In a class action case, one or two named plaintiffs "stand in" for the entire group of similarly aggrieved persons or firms during the course of the litigation. The named Lead Plaintiffs represent in addition to themselves, a large "class" or number of individuals and/or businesses is a similar situation to them. The individual interests of the named Lead Plaintiffs and all those similarly situated are at stake.

The results in the class action case bind BOTH the named plaintiffs (just as they would in ordinary litigation) AND all other persons who were included in the class. Usually, potential class members have the option, after receiving notice, of excluding themselves from a class or class settlement, and pursuing the case on their own.

The class procedure allows individuals and small businesses to bring meritorious cases that would have been too expensive and inefficient to litigate individually. For example, if you bought 100 shares in an Initial Public Offering of Company X at $10 per share, and because Company X had used a fraudulent prospectus the shares went down to $4 per share, would it be worth your while to sue for your own $600 loss ($10 - $4 = $6 x 100 shares = $600)? On the other hand, as there would have been hundreds of other shareholders who also lost $6 per share at the same time, a class action is an effective method to obtain redress.

When a class case settles, the judge presiding over the case must approve the fairness and propriety of the settlement.

SHOULD I, OR DO I NEED TO BE, INVOLVED IN A CLASS ACTION, AND IS THERE RISK OR EXPENSE FOR ME?

In most cases you need take no steps of your own to join a class action. Indeed, usually only those who wish to exclude themselves from a class case need do anything. By participating in a class case, you accomplish a number of objectives. You may receive compensation for a wrong, injury, or loss you have sustained -- compensation that may not have been available to you in any other forum. Through inclusion in a class of similarly harmed persons, you also demonstrate to the court that the alleged harm done was substantial and impacted a large number of people, increasing both the likelihood of recovery and its size. Moreover, the only costs to you will be drawn from any settlement or judgment proceeds upon successful resolution of the case. Class counsel work on a contingency fee basis and only get paid upon successful resolution of the matter. In addition, the attorneys advance expenses and costs associated with prosecuting class cases.