Administration costs
Administration costs are what it costs to notify the class, process claims and pay people. They are often paid out of the settlement fund.
Also called: settlement administration costs, notice and administration costs, claims administration fees
Administration costs are what it costs to notify the class, process claims and pay people. They are often paid out of the settlement fund.
What it means
Administration costs are the expenses of running a class action settlement after the deal is reached. They cover sending notice by mail, email or ads, running the settlement website and phone line, reviewing claims, issuing payments and reporting to the court. The company that does this work is the settlement administrator, and these are its fees.
Who pays depends on the settlement agreement. In many settlements the costs come out of the settlement fund before class members are paid, so higher costs mean less money for the class. In others, the defendant pays them separately, on top of the fund. The notice tells you which.
Judges look at these costs. For instance, the Northern District of California's settlement guidance asks the parties to explain the expected costs and who pays them. It also asks whether the costs are reasonable compared with the value of the settlement. That court does not approve the final amount until the final approval hearing.
What it means for you
You never pay administration costs, but you can feel them. When they come out of the fund, they shrink the pot that is split among claimants. They matter most when the fund is small and the class is large. The notice usually gives an estimate. If the total of fees and costs looks out of line with what class members will receive, you can raise it with the court by objecting before the deadline. Otherwise, there is nothing to do except file your claim on time.
Example
Say a settlement creates a $2 million fund. The notice says up to $200,000 may go to notice and administration, the lawyers will ask for up to $600,000, and the rest goes to claimants. If administration costs come out of the fund, about $1.2 million is left to pay claims. If the defendant paid administration costs separately, $1.4 million would be left.
FAQ
The settlement agreement decides. In some settlements the costs come out of the settlement fund. In others, the defendant pays them separately. Class members do not pay to file a claim.
Judges are supposed to check. Some courts ask the parties to show the costs are reasonable compared with the settlement's value, and they may wait until the final approval hearing to approve the amount. A class member who thinks costs are excessive can object.
Related terms
- N.D. Cal., Procedural Guidance for Class Action Settlements
- Federal Judicial Center, Judges' Class Action Notice and Claims Process Checklist and Plain Language Guide (2010)
Updated Oct 18, 2026. Plain-English definitions for general information — not legal or tax advice.