What Is A Class Action Suit?

Not all lawsuits are filed individually by a single person who wants to take legal action for personal harm suffered. Situations that affect a group of people can be acted upon corporately, in the form of a class-action suit.

So, what is a class action suit? It is civil litigation that is filed by one or more individuals on behalf of a larger group of people with a common complaint. The kind of lawsuit can be filed in either state or federal courts. The complaint is usually against a company or other large entity, which makes pursuing individual litigation repetitive and financially unrealistic.

The largest class suits of all time have revolved around investment fraud, including suits against Nortel, Enron, and AOL Time Warner. In the case of a fraud-related lawsuit, for example, complainants will have all suffered financial losses as a result of fraudulent investment practices.

Another common example of a class action is when many consumers suffer injury from the same defective product. These suits frequently involve hundreds, thousands, or millions of participants with similar complaints. Once the suit is certified, the complaints can be heard in a single trial.

Read on to learn more about class action lawsuits.

Who Can File a Class Action Suit?

If a prospective defendant has hurt you, you can sue them seeking compensation for their actions. Whether the suit will become a class action is determined once you have filed the lawsuit.

Anyone can file a class action suit. It is the courts that determine whether the matter becomes a class action, however. The crucial requirement for being able to file a class-action suit is that you’ve suffered harm, which could be physical or financial.

If several other people have suffered the same violation, you may file a class suit. A lawyer experienced in class action lawsuits can help you determine whether your experience might qualify to file a class-action lawsuit and how to approach the process.

How Class Action Suit Works

This kind of suit starts as a written complaint outlining a problem and the specific group of people involved. The individual or entity bringing the complaint forward on behalf of the group is known as the class representative. The court will then need to determine whether the complainant and the group meet legal requirements.

The complaint will then be certified. Any person that meets the class definition will automatically become a member of the class, even if they didn’t apply or know about the action. If the class is not certified, complainants will have to pursue their cases individually.

For the suit to be certified, the class representative and class action lawyers must ensure the case meets several conditions, as outlined below:

  • There’s a legal claim against the defendant
  • There’s a large group of people who have suffered similar harm under the same conditions. The case of each class member must involve similar issues of factual corroboration and law as that of the class representative or the lead plaintiff.
  • The lead plaintiff has a viable plan and the capacity to represent the class effectively. They shouldn’t have any conflict with other members of the class. A lead plaintiff who seeks monetary compensation for himself but is willing to agree to coupons for other class members is probably not representing the class effectively.

Class members often have little or no role when it comes to hearing the case. If the members aren’t satisfied with the outcome of the lawsuit, they can opt-out of the class and pursue the defendant individually. It may not be possible if the defendant has been declared bankrupt, though.

It’s worth noting that not all class action lawsuits seek monetary compensation. Others seek injunctive relieve, whereby an entity is instructed to stop any illegal or harmful practices by order of the court.

The lead plaintiff or class representative is often paid on a contingency basis. They won’t receive any payment until there is a sufficient settlement or judgment. The court will approve and award the compensation to the lead plaintiff and order the distribution of the remainder to class members.

Depending on the nature of your lawsuit, you may be more favorably served in the state court system or the federal court system. It has been found that federal courts generally produce more favorable results for defendants. State courts tend to favor a class of plaintiffs.

The initial filing of a class action case will be done in the state courts and then transferred to the federal level if the need arises.

Types of Class Action Lawsuits

Several different types of class action lawsuits arise. A class action attorney can advise you on which type is appropriate to file for your situation.

Consumer Class Action

A company can sometimes sell a product that breaches various regulations. It may include misleading advertising or denying customers the benefit of the bargain that they expected upon payment.

The law protects consumers when they purchase something that turns out to be different from what the company promised. Affected customers can file a consumer class-action suit against the company, for example.

Product Liability Class Action

In some instances, a product can be defective, or the manufacturer can fail to warn consumers of a safety issue. Anyone involved in selling the product to customers can be held liable in this type of class-action suit.

Securities Class Action

When a company lures its investors into purchasing securities through misrepresentation of facts, the company can be held responsible in a class-action lawsuit. For example, a company can misstate its revenues on its financial statements or make a false projection of future revenues.

When shareholders of that company lose money, they can file a lawsuit to recover the losses incurred as a result of the company’s misinformation.

Employment Class Action

A company’s practice can have detrimental effects on many of its employees. For example, companies have been sued for violating wages or overtime laws. It’s worth noting that some types of employment class actions require the plaintiff to opt into the case instead of being granted automatic inclusion.

Pros and Cons of Class Action Lawsuits

Class action lawsuits have unique advantages and disadvantages.

The Pros

  • Offers compensation to complainants who would otherwise have received nothing because they cannot afford a lawyer
  • Help reduce the backlog of cases in the courts
  • Reduces the cost of litigation—one massive lawsuit is cheaper to litigate than many smaller ones
  • Ensures that defendants who are facing similar complaints are treated equally—one judgment applies to the entire class
  • Encourages defendants to settle since there are many plaintiffs to back the claim

The Cons

  • Complainants may receive little compensation while lawyers earn significant fees
  • It can take a long time to reach a decision thanks to the complex nature of class action suits
  • Class members relinquish their control over the lawsuit to the class representative and their attorney
  • Plaintiffs may receive rebates or coupons instead of cash payouts
  • The quality of legal representation affects every member of the class, so if the attorney isn’t up to the standard, every member of the group suffers

How To Choose The Right Class Action Lawyer

The first step to starting a class action lawsuit is to choose a class action lawyer. The right lawyer can be the difference between winning and losing your case. Here are some vital considerations to make when choosing a class action attorney:

Compatibility

It is important to find a lawyer who not only meets your needs but can also represent the needs of the class as a whole. Ask the following questions:

  • Do you get along with the prospective lawyer?
  • Does the lawyer answer your questions in an understandable manner?
  • Is the lawyer reasonably accessible?
  • Does the lawyer communicate effectively?

You want an attorney you that can comfortably communicate with and who is available for consultation. The attorney should be ready to listen to your needs and solve your class complaint. A healthy working relationship with your attorney will also ensure the entire process runs smoothly.

Relevant Experience

Class action suits call for a level of expertise that encompasses filing the necessary paperwork, pleading and proving the existence of the class, and selecting the best class representative.

It’s advisable to choose a lawyer who has handled several class-action cases in the past. It would be even better if the lawyer had experience dealing with a case similar to yours and a successful outcome.

Resources

Besides competence and experience, a reliable class action lawyer should have the resources to research and execute your case comprehensively. Find out the financial status of the law firm and how many class-action suits they are handling concurrently. If you feel the firm’s resources are overstretched, consider finding another lawyer who would be able to pursue your case more effectively.

Fee Structure

Money is an integral component of an attorney-client relationship. It is important to discuss the legal costs before diving into the case to avoid any disagreements later. You want to choose a lawyer who is straightforward and transparent in his pricing.

Generally, class action attorneys work on a contingency basis. It means they only get paid if your case is successful. The attorney’s fee is based on a percentage of the amount awarded in the suit, so it is essential to agree to everything in writing before the work begins.

Location

All plaintiffs in a class-action lawsuit must have a similar complaint, but they don’t all have to come from the same location. For example, consumers from different states can be affected by the same defective product.

Find out if your prospective class action attorney has the capacity to meet your needs regardless of where each class member is located. Likewise, choose a law firm that has the experience necessary to handle countrywide cases.

Why Practice as a Class Action Attorney?

If you aspire to handle large, high-profile cases, then you should consider pursuing a career in class action law. Class action law is ideal for lawyers who can handle complex litigation and master the various aspects of civil procedure.

Practicing class action law gives you the opportunity to impact the lives of millions of people. If you’ve always wanted to make a positive impact on society through litigation, this career can be a rewarding choice for you. It’s worth noting that class action cases normally involve massive amounts of information, with tons of paperwork, so you’ll need to be comfortable with research and analysis.

You need to be organized to be a successful class action attorney. You also need interpersonal skills since these cases require many legal professionals working together toward a common objective. You have to know how to work with fellow lawyers and effectively manage assistants, too.

It is also imperative that you have an in-depth working knowledge of the civil procedure rules that apply to the case. Motions, briefs, and pleadings usually have intricate requirements. As a class action lawyer, you need to understand the requirements and know how to use the rules of the civil procedure to your advantage as far as advocating for your clients’ interests.

How To Become a Class Action Lawyer

If you want to pursue a career in class action law, you’ll need to meet various academic requirements. It includes earning a Juris Doctor Degree and passing your state’s bar examination. You may also need soft skills, such as communication and research skills.

Relevant experience will boost your employability as a class action lawyer. Let’s take a detailed look at what it takes to become a class action attorney:

Educational Requirements

You’ll need to acquire a Juris Doctor (JD) Degree from a law school that has been accredited by the American Bar Association (ABA) to become a lawyer. JD programs usually comprise courses in civil procedures, criminal law, torts, legal writing, ethics, and property and contractual law.

These courses also include simulated court proceedings, which help you integrate theory and real-life situations. Students looking to become class-action lawyers may choose to pursue a concentration in civil law, for example. It will require them to focus on courses such as:

  • Community property
  • Civil procedures
  • Arbitration
  • Donations and trusts
  • Environmental law
  • Negotiation and mediation
  • Security rights
  • Sales and leases
  • Trial advocacy
  • Immigrant rights
  • Licensure Requirements

Once you earn your JD, you have to pass the bar examination in the state where you plan to practice. Bar exams often take two to three days to complete. They typically comprise essays and multiple-choice questions to gauge your mastery of state laws, as well as general legal principals and ethics.

In some states, you may also be required to undergo a comprehensive character and fitness assessment before you are awarded a license to practice law. Once you receive your license, you’ll have to meet continuing educational requirements, too.

Experiential Requirements

A class action lawyer job requires you to have strong research and writing skills. A solid academic background also adds to your employment prospects. An evaluation of job postings, for example, showed that law firms recruiting class action lawyers sought candidates with three to four years of experience.

Specifically, these firms were looking for lawyers with hands-on experience working tort cases, drafting motions for summary judgments, and arguing motions at hearings.

What Is The Cost of A Class Action Attorney?

For plaintiffs, it normally doesn’t cost anything to retain a class action attorney. Class action lawyers only receive a payment if there is either a settlement or a judgment in favor of the class. The attorneys’ fees will then come off the settlement and are often a percentage of that amount.

According to ZipRecruiter, class action attorneys in the United States earned an average of $99,665 as of November 2019. The actual earnings may vary depending on several factors, though, such as the nature of the case and the type of employer. Class action attorneys can earn as low as $30,000 and a high as $150,000 in annual salary statistics.

Final Thoughts

A class-action suit is one in which individuals with similar injuries inflicted by the same product or activity sue the defendant as a group. People seek justice in class action suits when they suffer damages from defective products, corporate misconduct, consumer fraud, securities fraud, employment malpractices, and more.

If you have suffered damages from a product or action and you think there are others who have suffered similar damages, you should seek legal advice from a lawyer who is experienced in representing people in this type of case. In addition to advising clients, class action lawyers also investigate potential cases, draft motions and complaints, and argue before the court.

These lawyers usually specialize in areas such as personal injury, employment law, and consumer fraud. The path to becoming a class action lawyer can be challenging, but there is potential for a rewarding income and a fulfilling career.

You’ll need to attend law school to acquire a JD degree and then pass your state’s bar examination. In addition to the academic requirements, you’ll need strong skills in communication and research to become a successful class action attorney.

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