But in the end this kind of thing shouldn't be regulated by lawsuits from individuals. The fines as I remember it can be up to 4% global annual revenue and it's about time someone actually handed a fine of 4% global annual revenue to a company the size of Meta, so companies finally realize that the law isn't just a recommendation.
There are some issues with contingency fees in German legal professional law. However, it can be argued that suing for these 5,000 EUR is just "collections", so it may be allowed.
The risk lies elsewhere: As I outlined in another comment, there is reason to believe that this may not stand on appeal, or at least that other courts in other parts of Germany may decide differently. As a result, it takes a lot of capital to keep all of these lawsuits going until the Federal Court of Justice or the ECJ have decided and there is legal certainty.
There is a EU directive that allows for "representative action" but it's much narrower scope compared to what Americans are familiar with in class action.
For example there's a law that says the airline needs to pay you 400€(?) if your flight is delayed by more than 2h if it's due to the airlines fault.
There's a company that handles these cases for 130€.
That's 270€ you get and you just need to enter some data.
I never used one of the "collection agencies", because it's an incredibly easy process to do yourself. Yes some airlines try to wiggle out of it, but you just threaten them with going to arbitration (I think that's what it was? I've moved away from Europe several years ago), and show that you know the rules and they quickly let up, because IIRC they get fined (not just your compensation) if they get found to be in the wrong.
Most of the world, actually. Pure common law systems are just in CANZUKUS (and a few dozen of other minuscule former British colonies).