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How workers can use litigation financing

Employees in New York who are experiencing legal issues associated with worker rights might be interested in the trend of litigation financing. This is the practice of having investors fund a lawsuit in exchange for a percentage of the compensation received. Investors tend to only choose lawsuits that they have a great deal of confidence in because if the lawsuit is not successful, the plaintiff does not have to repay the investment. While litigation financing has primarily been used in big commercial cases, experts say that it may become more common in the world of employment law.

Investors may finance either plaintiffs or defendants. One way that litigation financing is attractive to businesses is in cases involving confidentiality agreements or trade secrets. In such cases, the business is generally more interested in stopping the practice and sending a message than in how much it gets in damages. Therefore, having a portion of the compensation awarded go to investors is not a problem.

Litigation financing may also be a good tool for employees filing class action suits regarding issues such as overtime claims. One critical element to examine is interest rates. High interest rates combined with a long settlement period could mean little compensation left for employees, so litigation financing is best used in cases where there will not be a gap of years before a settlement is paid.

Workers may be concerned that they cannot afford to pursue a lawsuit against a better-financed employer. If a group of employees has a complaint, then litigation financing might be one way to receive proper funding. Employees who think their rights as workers are being violated might want to consult a lawyer to discuss how they should proceed.

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