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Understanding Class Action Lawsuits

Class action lawsuits often capture headlines, but they can be complex, and seem overwhelming. Below, we take a look at what class action lawsuits are and how they affect individuals and businesses.

A class action lawsuit is defined as a lawsuit where one or several persons take the lead in a case on behalf of a larger group, or “class.” This type of lawsuit evolves out of the concept that it’s often difficult and inefficient to review individual cases when the parties involved have experienced a situation that affects a large group of individuals, businesses, or organizations.

One famous class action lawsuit, for example, pitted British consumers against Barclays Bank in 2017 over a mis-selling scandal involving payment protection insurance. British consumers claimed the bank sold them a financial product they did not understand and did not need, and the Supreme Court of the UK found in favor of the consumers, resulting in Barclays paying out £1.1 billion in compensation.

Class action lawsuits are beneficial when larger organizations are held responsible for wrongdoings, which may have affected a large group of individuals. The lawsuit serves to make the organization whole, and it serves as a warning to companies that they must provide legal services ethically and take into consideration any legal advice they are given.

How Do They Work?

The details of each class action lawsuit are unique, but in general, one or a select few representative individuals with similar complaints file a case on behalf of a larger group. The plaintiff’s attorneys act as a representative of the larger class and can file the case in a federal or state court.

The court must decide whether the case meets the requirements to become a class action lawsuit. This includes determining that the class shares the same type of claim, and the number of possible claimants is large.

Once class status is given, the judge will be responsible for ensuring fairness of the case. This could include appointing individuals to serve as class representatives, granting interim relief such as monetary payments, appointing class attorneys to receive fees for their services, and issuing a verdict.

The Impact On Business And Individuals

Class action lawsuits can have a major impact, and many people choose to opt out of class action proceedings if the monetary award is less than what can be received through individual legal proceedings. However, for individuals who have experienced wrongdoings, a class action lawsuit enables collective action, and can level the playing field with corporations and large organizations.

Class action lawsuits can also leave a lasting effect on businesses, as companies may face reputational damage or financial losses due to a class action lawsuit settlement. Corporations and organizations should take extra caution when it comes to providing legal services, understand all of the legal advice they receive, and ensure they are adhering to the law and creating a fair environment for all who they interact with.

Understanding the process of class action lawsuits, and the potential impacts, can help individuals and businesses ensure any legal advice they receive is how it should be – legally and ethically comprehensive.

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