A CP fee, short for common benefit fee, is a court-ordered deduction from your settlement in a multi-district litigation or mass tort. It compensates the lead attorneys — the Plaintiffs’ Steering Committee — whose depositions, expert work, document review, and settlement negotiations made every individual claim in the case viable. Assessments typically run between 4% and 8% of your gross recovery, though courts have set them lower and, in some large MDLs, considerably higher.
Why the Deduction Is on Your Settlement Statement
In a mass tort involving a defective drug or medical device, a small court-appointed committee handles the litigation groundwork for hundreds or thousands of plaintiffs. They depose corporate executives, review millions of internal documents, retain experts, and develop the trial strategy that pushes the defendant toward a global settlement. Without a fee-sharing rule, every other plaintiff’s attorney would benefit from that expensive work without paying into it.
The common benefit assessment solves that free-rider problem. Courts ground their authority to impose it in their inherent managerial power over complex litigation, the same discretion they use to appoint lead counsel and manage bellwether trials.1Louisiana Law Review. Common Benefit Fees in Multidistrict Litigation The fee isn’t optional. It’s set by a formal Common Benefit Order entered early in the case, and it governs every settlement that follows.
How Much the Fee Runs
Judges typically set the assessment between 3% and 6% of each plaintiff’s gross settlement, though many large MDLs exceed that range.2Judicial Studies, Duke University. Chapter 3 Establishment and Use of Common Funds For smaller individual settlements, the percentage can climb to 12% or higher because the fixed costs of running the litigation don’t shrink with the size of the award.
Two recent cases show the spread. In the Roundup products liability MDL, the court ordered an 8% holdback from each plaintiff’s gross recovery for the common benefit fund.3United States Court of Appeals for the Ninth Circuit. Roundup Products Liability Litigation In the 3M Combat Arms earplug MDL, participating counsel faced roughly a 9% assessment, and attorneys who hadn’t signed a participation agreement were assessed at 15%.
Courts pick the number using one of three approaches: a flat percentage of the recovery (the usual method in MDLs), a lodestar calculation based on reasonable hours times reasonable rates, or a blended approach that sets a percentage and cross-checks it against lodestar.1Louisiana Law Review. Common Benefit Fees in Multidistrict Litigation
Who Actually Pays It
Read your statement carefully, because the answer depends on how the court structured its Common Benefit Order.
In many MDLs, the assessment is technically extracted from your attorney’s contingency fee rather than added on top of your deductions. One federal judge who helped shape modern common benefit practice put the reasoning this way: in an MDL, the real beneficiary of the lead attorneys’ work is the individual plaintiff’s lawyer, because that work is what made each case settle-ready. So the individual lawyer, not the plaintiff, should bear the cost.1Louisiana Law Review. Common Benefit Fees in Multidistrict Litigation
Some court orders split the obligation. In the DePuy hip implant MDL, plaintiffs agreed to pay 1% directly while their attorneys paid 5%.2Judicial Studies, Duke University. Chapter 3 Establishment and Use of Common Funds The practical question to put to your lawyer is direct: does the CP fee reduce the gross settlement before your contingency is calculated, or does it come out of your share? Most plaintiffs never ask, and the answer changes the check.
How the Order of Deductions Changes Your Check
Take a $100,000 gross settlement, a 5% common benefit assessment, and a 40% attorney contingency.
If the CP fee comes off the gross recovery first, then the contingency is calculated on what’s left:
- Gross settlement: $100,000
- CP fee (5%): −$5,000
- Subtotal: $95,000
- Attorney contingency (40% of $95,000): −$38,000
- Before liens and costs: $57,000
If the CP fee is absorbed by your attorney’s contingency share:
- Gross settlement: $100,000
- Attorney contingency (40%): −$40,000
- CP fee (5% of gross, paid out of the attorney’s $40,000): no additional charge to you
- Before liens and costs: $60,000
That’s $3,000 on the same settlement, driven entirely by sequence. After the contingency and CP fee, medical liens, litigation expenses, and any other holdbacks come out before you see the balance. Ask your attorney to walk through the math on your specific statement rather than assuming.
CP Fees When Your Case Was Filed in State Court
Federal MDL judges generally can’t order state court plaintiffs or their attorneys to pay into a federal common benefit fund. What they can do is create Participation Agreements that state court attorneys sign voluntarily. Signing gives the state court lawyer access to MDL discovery, expert reports, and legal strategy. In exchange, that lawyer agrees to contribute to the fund — often around 5% of gross recoveries. Attorneys who refuse to sign lose access to the MDL work product.
Most state court attorneys in major mass torts do sign on, because the value of the discovery and strategy materials outweighs the cost of the assessment. If your case sat in state court alongside a federal MDL, check whether your lawyer signed a participation agreement — that’s the mechanism that puts the CP fee on your statement.
Objecting to the Fee
You can object, but success is uncommon. Federal appellate courts review common benefit fee awards under an abuse-of-discretion standard, meaning the trial judge’s ruling stands unless it’s clearly unreasonable. The Eleventh Circuit has described courts as having “broad managerial power” in complex litigation that “includes significant discretion in awarding fees.”
If you think the assessment is excessive, your options are to file a written objection before the court finalizes distributions, request limited discovery into the fee applications and time records, and ask the court to reduce the percentage based on the circumstances of your case.2Judicial Studies, Duke University. Chapter 3 Establishment and Use of Common Funds
Judges rarely trim a fee once the Common Benefit Order sets it. The objections that get traction point to a specific problem: a percentage that has drifted far above comparable MDLs, or a fund whose accounting lacks transparency. General disagreement with the number, without something concrete behind it, tends to go nowhere.
Does the CP Fee Affect Your Taxes
It depends on the type of claim you settled.
If your settlement compensates you for personal physical injuries — which covers most mass torts involving defective drugs, medical devices, or toxic exposure — the entire recovery is excluded from taxable income under IRC Section 104.4IRS. Tax Implications of Settlements and Judgments The CP fee doesn’t change that. The whole settlement is tax-free regardless of how it’s divided.
If your settlement involves non-physical claims (employment disputes, contract fraud, certain whistleblower cases), the picture is different. Under the Supreme Court’s decision in Commissioner v. Banks, you generally must report the full gross settlement as income, including any portion paid to attorneys.5Justia Law. Commissioner v. Banks, 543 U.S. 426 (2005) The IRS may treat the CP fee amount as part of your taxable income even though it never hit your account. An above-the-line deduction for attorney fees exists under IRC Section 62(a)(20) for certain employment discrimination and whistleblower claims, but it doesn’t reach all litigation types. For a taxable settlement, talk to a tax professional about your specific claim category before you file.