Employment Law Case Funding

What Is Employment Case Funding?

Employment-related lawsuits are more common than you might think. According to the U.S. Equal Employment Opportunity Commission (EEOC), 61,331 employment-related charges were filed in U.S. courts in 2021. Cases that resulted from these charges generated an estimated $34 million in payouts.

Employment case funding offers workers a way to cover expenses during an employment-related lawsuit. This includes lawyers’ fees, other legal expenses and daily living expenses incurred while you’re between jobs.

Employment case funding significantly improves plaintiffs’ financial stability. Many people who undertake employment-related litigation don’t have enough money to pay for upfront court fees, let alone several months’ worth of lawyers’ fees. Without access to lawsuit funding, these people might never bring their case to court. With it, they can fight for their rights and eventually win compensation for their troubles.

Employment case funding is usually non-recourse. This means that if you lose your case, you’re not required to pay the money back. You’ll only have to pay back your loan if you win a settlement. If your payout is a lump-sum settlement, you’ll pay back your loan immediately. If your payout is a structured settlement, you’ll pay back the loan in installments. 

Employment law, which is also referred to as labor law, encompasses the assortment of regulations, rules and principles that govern the relationship between employers and employees. Prominent aspects of employment law relate to hiring, compensation and benefits, workplace safety, discrimination and termination.

Thomas J. Brock, CFA®, CPAInvestment, Corporate Finance and Accounting Professional

Thomas Brock, CFA®, CPA, is a financial professional with over 20 years of experience in investments, corporate finance and accounting. He currently oversees the investment operation for a $4 billion super-regional insurance carrier.

How Employment Case Funding Works

You can receive pre-settlement funding or post-settlement funding for your employment lawsuit.

Pre-settlement funding gets you cash to pay for your legal fees and other expenses before your case settles. Post-settlement funding comes after you’re awarded a settlement. Companies who offer this type of funding use your upcoming settlement money as collateral for a cash advance, helping you get your hands on the money you need sooner. 

Fees and interest rates for employment case funding depend on the company you work with. Some states cap the amount of interest a lender can charge for a third-party litigation loan like this. But you can expect to pay around 10% interest for the money you receive. 

What Kinds of Employment Cases Can Be Funded?

Employment case funding is available for any employment-related lawsuit, including cases related to discrimination, harassment, wrongful termination and retaliation.

If you believe someone treated you unfairly at work, consult an attorney. A lawyer will let you know if you have a strong enough case to bring the matter to court. You can then apply for employment case funding if you need it. 

Qualifying & Applying for Employment Case Law Funding

Most companies who offer employment case funding decide whether to lend you money based on two factors: the strength of your case and the potential payout from your lawsuit.

Because you don’t have to repay most employment case fundings if you lose in court, there’s no credit check or employment check involved. Lending decisions get made based solely on the merits and strengths of your legal claim.

You can apply for employment case funding on your own or with your lawyer’s help. Working with an attorney is strongly recommended. Attorneys are well-acquainted with reputable lenders and will consult with your funding company to help it understand the specifics of your case. In fact, many lenders will only accept funding applications from people who are being represented by a lawyer. 

How Employment Law Case Funding Can Help You

Employment law case funding has helped countless Americans cover their expenses while fighting a legal claim against an employer. If you’re worried about fighting an injustice you’ve experienced at work because of the financial toll the court case would take on your family, employment law funding can give you the peace of mind you need to pursue justice. It can also help you keep up with the payment schedule for any debts you owe, protecting your credit score through this difficult time. 

Accepting employment law case funding also comes with some risks. Some companies who offer this type of funding charge high interest rates that can make repayment difficult, especially if you receive a structured settlement instead of a lump sum. Other companies aren’t the legitimate lenders they appear to be. Some may attempt to scam you.

If you’re considering taking an employment-related case to court, consider contacting an organization that provides legal aid in your area. If you qualify, you could get free or low-cost legal help. You can also contact advocacy groups like the National Institute for Workers’ Rights for further information on employment law and resources to help you make your case.