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Joining a class action lawsuit can sound like a win-win: you and others who’ve experienced the same problem go after a company together and potentially receive compensation without paying any legal fees out of pocket. It’s an empowering process, but it does come with a few trade-offs.
In this article, we’ll break down the key risks of joining a class action lawsuit, from having limited control over the case to receiving a smaller payout than you expected, so you know exactly what you’re getting into.
What does it mean to join a class action lawsuit?
Joining a class action usually doesn’t require any action on your part. In most cases, participation in a class action is automatic if you meet the definition of a class member (e.g., having bought a certain product in a specific timeframe). You’ll only need to take action if you want to opt out and pursue your own separate lawsuit.
On the other hand, starting a class action makes you a class representative (or lead plaintiff), the person who works directly with the attorneys, attends court hearings, and helps represent the interests of everyone in the group.
Being a regular class member and serving as a lead plaintiff come with different levels of risk and potential reward, which we’ll explore further in the following sections.
What are the potential risks of joining a class action lawsuit?
Participating in a class action lawsuit carries a few risks, such as:
- Limited compensation
- Extended timelines
- Limited involvement and decision-making power
- Losing the right to file an individual lawsuit
- Reliance on legal representatives
Limited compensation
It’s possible that the payout you receive from a class action won’t fully cover the loss you’ve experienced. The exact amount each person gets depends on the number of people in the class: the larger the group, the smaller each share tends to be.
On top of that, lead plaintiffs are typically entitled to a larger portion of the settlement as a reward for their active involvement in the case, reducing payouts for regular class members.
Attorney fees can also reduce individual payouts, as lawyers typically take between 25% and 35% of the total settlement fund.
Another potential drawback is non-monetary compensation, which often has limited real-world value. For example, the Dunk vs. Ford Motor Co. (1996) class action resulted in a settlement valued at around $26 million. However, class members received $400 coupons for purchasing a new Ford vehicle within a year. This created two major issues:
- Some class members suffered damages of around $600, so the $400 coupon did not fully cover their losses.
- Many class members didn’t want to buy another Ford vehicle after the issue, so they never received any meaningful compensation.
Extended timelines
Class action lawsuits can take a long time to resolve. The exact timeline can be hard to predict, as it depends on factors like:
- The complexity of the case
- Court schedules and administrative delays
- Settlement negotiations
- Potential appeals
Some class actions move surprisingly fast. For example, the Volkswagen “Dieselgate” case began in September 2015 and was resolved in little over a year, even though it involved thousands of class members.
Other cases can drag on for decades, and the perfect example is Cobell v. Salazar. The class action, filed in 1996, accused the United States government of mismanaging trust funds belonging to around 300,000 Native Americans. After years of litigation and multiple appeals, the case finally concluded in 2012 with a multi-billion-dollar settlement.
Limited involvement and decision-making power
Unlike lead plaintiffs, regular class members have very limited involvement in a class action lawsuit. They:
- Don’t have a say in the legal strategies applied in the case
- Can’t choose whether to accept a proposed settlement
- Can’t decide what evidence will be presented in court
In other words, unless you’re a lead plaintiff, you’ll have virtually no control over how the case is handled. If you’d rather stay involved in decisions and maintain control over your case, pursuing an individual lawsuit may be a better option.
Losing the right to file an individual lawsuit
Unless you opt out of a class action, you automatically give up the right to file an individual lawsuit for the same damages. If the class action fails or settles for less than you think is fair, you won’t be able to take separate legal action.
Reliance on legal representatives
Starting a class action lawsuit without a lawyer isn’t possible, no matter how well-prepared you are. Class actions are complex and require professional legal representation to ensure proper case management, compliance, and fairness for everyone involved.
While having an attorney handle the case can be reassuring, it also means that you and other class members depend entirely on their expertise.
As a regular class member, you don’t get to choose who represents you in court. If the class counsel lacks experience, strong negotiating skills, or attention to detail, the entire case could be jeopardized.
What are the advantages of joining a class action lawsuit?
Are class action lawsuits worth it? Answering the question is hard if you’re only considering the risks. You should understand both the pros and cons of a class action lawsuit to decide whether joining one makes sense for your situation.
Here’s a quick overview of the main benefits of class action lawsuits:
How Settlemate helps you claim what’s yours
While class action lawsuits do carry certain risks, the advantages can far outweigh the drawbacks. The real problem is not claiming what you’re owed, either because you don’t realize you’re eligible for a class action payout or get discouraged by the time and effort it takes to file a settlement claim.
This is where Settlemate can make all the difference.
It allows you to reap all the benefits of joining a class action and recover every cent you’re owed. Settlemate streamlines the claims process and automatically detects eligible settlements without lawyers or confusing paperwork. It does so with smart, automated features such as:
- Automated scanning: With your permission, Settlemate scans your emails and purchase history, cross-checks them against its database of active class action settlements, and shows you the ones you qualify for.
- Pre-filled claims: Settlemate completes claim forms for you whenever possible to save time and minimize errors. You can review and submit a claim in minutes, directly from your phone.
- Real-time settlement tracking: Settlemate updates you on the status of your claims, deadlines, and payout estimates so you’re always in the loop.
- Smart notifications: You’ll get instant alerts when a new settlement you’re eligible for appears or when your existing claim moves forward.
- Clear proof guidance: If a claim requires supporting documents, Settlemate will tell you exactly what’s needed and how to submit it.
Get started with Settlemate right now by downloading the app from the App Store or Google Play.
Settlemate also offers a generous refund policy to make sure you earn more money than you invest. If the money you recover through settlements within the first year of using the app doesn’t cover the subscription costs, you may be eligible for a full refund.
Frequently asked questions
We’ve addressed the most frequently asked questions regarding class action lawsuits:
What happens if you lose a class action lawsuit?
If a class action lawsuit is unsuccessful, you won’t be responsible for any legal fees or court costs. Class action lawyers typically work on a contingency basis, meaning they cover all the costs upfront and get paid from the settlement fund if they win the case. However, losing a class action lawsuit means you won’t be able to seek compensation for the same damage through an individual lawsuit.
What are the average class action settlements?
Individual payouts vary depending on the size of the class and, in some cases, on the severity of the harm suffered. In large class actions with thousands of class members, individual payments typically average around $50, though the number can be higher or lower depending on the case.
Are class action settlements worth it?
In many cases, yes, especially for people with smaller claims or those who don’t want to actively participate in the litigation process. Those who believe their damages are substantial or unique may be better off filing an individual suit to ensure they receive maximum compensation.
