Class action lawsuits are usually resolved with one of two settlement structures: a common-fund settlement or a claims-made settlement. A simple way to think about the difference between the two is that the former is for a fixed amount while the cost of the latter is variable.

Common-Fund Settlements

In a common-fund settlement, the defendant agrees to the total cost of the settlement it will pay, i.e., the “common fund,” the pool of money from which all settlement expenses are deducted. These expenses generally include valid claims, plaintiffs’ attorneys’ fees and expenses, class representative incentive awards and settlement administration costs. While the amount each claimant receives is based on how many claimants file valid claims, the overall amount paid by the defendant is set on day one.

Claims-Made Settlements

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]