Quick definition of workers compensation: A system whereby an employer must pay, or provide insurance to pay, the lost wages and medical expenses of an employee who is injured on the job.
Most workers comp cases are cut and dry on liability and how to value the case. You would think a workers comp case would then be able to fund for lawsuit funding companies. Unfortunately workers comp cases are almost impossible to fund.
Why? In personal injury cases, the settlement or judgment check goes directly to the attorney. The attorney will then disburse the funds to themselves (legal fee), to any other liens (like a lawsuit advance, medical bills, child support, etc.), and whatever money is left over will go to the plaintiff. For instance, if you have a $100,000 settlement. The attorney will disburse $33,333 to themselves (33% legal fee), $7,500 to the lawsuit funder, and then $59,167 to the plaintiff.
But in Workers Comp the settlement or judgment checks go to the attorney (20% of the settlement or judgment) and the plaintiff (80% of the settlement or judgment) rather than 100% to the attorney for other personal injury cases. Therefore, the lawsuit funding company has to depend on the plaintiff to pay the advance back which will be tough to 1) track down the client and 2) receive the necessary payoff. Lawsuit funding companies base their payoff prospects on the attorney paying them back not a plaintiff who they have never dealt with.
Workers Comp and lawsuit funding do not mix in most states. The laws vary from state to state so talk to your attorney or call us at 215.599.6545 if you have any questions.