Understanding Referral Fees for Class Action Lawsuits
You see the advertisements all the time. A television commercial asking if you have been the victim of side effects related to a certain drug or medical device. Many attorneys advertise for class action lawsuits. So many that you may think there are countless lawsuits over the same thing.
Well, you’d be wrong. Although you may see many attorneys advertising, it is likely they are advertising for the exact same lawsuit.
So why so many commercials? Why would an attorney not handling a lawsuit advertise for another?
Referral fees, my friend. Referral fees.
Brief Overview of Class Actions:
Class actions are nothing new in the Untied States legal system. An easy way to understand them is to image a normal lawsuit, only with a whole lot of people suing the same person. Class actions are done when there are many victims and it is in the best interest of everyone (the plaintiffs, defendant, and court system) to combine things into one trial.
Class actions begin with a lawsuit, normally from a single victim. During the preliminary stages of the trial, it is found that there are likely many victims who may have a similar claim against the defendant. The judge will then be asked to combine them all into a “class” which means they all become plaintiffs and will receive part of any award or settlement that is reached.
While class action lawsuits are filed for many types of civil wrongs, the most common is for drug and medical devices,
Why Drug and Medical Device Lawsuits?
Many attorneys focus on drug lawsuits because they are the most common form of class action. Since many people wind up taking the same prescription or use the same medical device, there is a good chance that many people were harmed when something goes wrong.
You will find websites and advertisements everywhere that are set up to look for people who may be the victim of a drug injury. There are so many that you can obviously see there is no shortage of victims.
How Attorneys Get Paid:
For class action lawsuits, there is generally only one law firm handing the case. In the end, assuming there is a judgment, the firm will receive approximately 25 percent of the award. That amount is for the main law firm handing the case.
So what about the other attorneys who are advertising the lawsuit? Well, they get referral fees.
For class action lawsuits, it is important that the main law firm find victims, or members of the “class.” Attorneys advertising on television are basically doing that. They are not handling the litigation, only referring victims to the main attorneys.
In some states, referrals to recommend an attorney are not legal. However, this is bypassed as attorneys are not recommending a specific attorney to handle their case. They are referring victims who are already part of the class and would need to go to a specific attorney (the main law firm handing the case) for recovery anyways.
In essence, it is more of a finder’s fee than a referral fee.
The amount received for each referral will depend on a number of factors. Some pay by person, the quality of the referral (how much they were harmed), and the overall amount of the settlement or award. Fees can range anywhere from a few hundred to a few thousand dollars. Not bad for simply advertising and referring people.
The purpose of this piece is to let you know that you don’t really need to go through countless attorneys if there is a class action you are affected by. You don’t need to vet each one as there is likely an attorney already assigned as the main litigant. Any attorney you reply to will likely only refer you to them.
Of course, you should still do your own research to make sure you chose the right attorney for your case. You can find an attorney to evaluate your case by searching our database.