California employees who have valid grievances with their employers may feel pressure to quickly settle their cases for far less than they might receive through litigation. This often happens when there is a disparity between the financial abilities of the respective parties to handle the expense of a protracted courtroom battle. Litigation funding may provide an option that could help employees with strong cases to pursue their matters fully.
Litigation financing has typically been reserved for large companies. However, it has increasingly become more of an option in labor and employment cases. With this type of financing, investors agree to fund the cost of a lawsuit upfront and are repaid only if the case is successful. This means that a litigation financing company will likely agree to fund only those lawsuits it believes are strong cases that the borrowers are likely to win.
When a plaintiff borrower does win the case, the litigation financing company is repaid a portion of the proceeds the employee receives. Companies may accept financing for class action lawsuits involving a group of aggrieved employees, or they may agree to take smaller cases and bundle them together with others in order to spread the risk across a number of cases.
When employee rights have been violated and aggrieved workers are considering how best to proceed, litigation financing may present a funding alternative for the costs involved in a lawsuit. People who are interested in learning about this type of an option when they are pursuing claims for unpaid overtime or similar offenses may want to meet with an attorney to further discuss it.