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Related read: Can you get pre-settlement funding while receiving workers' compensation?
Nothing here is legal advice. The frameworks below are consistent with widespread practice; consult your attorney for anything case-specific.
The Two Recovery Paths for Injured Workers
An employee injured on the job typically has two potential recovery paths:
- Workers' compensation benefits. Statutory no-fault benefits from the employer's workers' comp insurance. Medical benefits, disability payments, permanent impairment awards. This is the exclusive remedy against the employer in almost every state.
- Third-party claims. Traditional negligence claims against any party other than the direct employer — subcontractors, product manufacturers, drivers in workplace vehicle accidents, property owners, and other non-employer defendants.
Common Third-Party Case Types
- Construction accidents: Subcontractor negligence, general contractor negligence, defective equipment manufacturer.
- Vehicle accidents on the job: Delivery driver hit by third party, truck driver hit by another motorist, worker driving between job sites in a company vehicle.
- Product defect on the job: Defective ladder, defective machinery, defective safety equipment.
- Slip/fall on someone else's property: Delivery to a private property with hazardous conditions.
- Toxic exposure: Chemical, asbestos, or other exposure caused by non-employer party.
How the Two Paths Interact
Workers' comp is a lien against the third-party recovery in most states. The comp carrier is entitled to reimbursement for benefits paid, from the plaintiff's third-party recovery. Statute varies by state — some have 100% recovery rights, others cap it or require reduction by attorney fees.
For funding purposes, the comp lien is a factor in net-to-plaintiff calculation but does not disqualify the third-party case.
Funding a Third-Party Case
Pre-settlement funding is available on filed third-party cases with:
- Documented workplace injury.
- Identified non-employer defendant.
- Attorney-represented case.
- Third-party claim actually filed (not just workers' comp filing).
Advance Sizing
Advance sizing accounts for the comp lien in net calculation. A case with:
- $200,000 estimated gross recovery.
- 33.3% attorney fee = $66,667.
- $5,000 case costs.
- $30,000 workers' comp lien.
- Net to plaintiff: ~$98,000.
Reasonable first advance: $5,000–$14,700 (5%–15% of net).
Case Timeline Considerations
Third-party cases typically take 18–36 months to resolve — similar to standard PI cases. Workers' comp benefits continue in parallel during litigation, which supports the plaintiff's baseline income and reduces the pressure that would otherwise drive premature settlement.
The Bottom Line
Workers with legitimate third-party claims can access pre-settlement funding on those claims regardless of parallel workers' comp benefits. The comp lien affects net calculation but not funding availability. Work with an attorney experienced in both workers' comp and third-party litigation to maximize total recovery.
If you are comparing pre-settlement funding options, Instabridge Funding is attorney-founded, non-recourse, and transparently priced with clear rate and cap disclosure at contract execution. Apply for a specific offer — no obligation, no cost to review.
Frequently asked questions
Almost never. Workers' comp is the exclusive remedy against the direct employer. Exceptions exist for intentional torts by the employer (extremely narrow).
Any third party involved — subcontractor on a construction site, driver who hit you, product manufacturer, property owner.
Yes. The comp carrier has a lien on the third-party recovery for benefits paid. This is factored into net-to-plaintiff.
Usually not directly. Workers' comp itself pays weekly/monthly benefits; there is no lump-sum settlement to fund against (except in some settlement scenarios).
Yes, if it's filed, you're represented, and the case has value.
Same factors as any PI case: liability, damages, insurance coverage, jurisdiction. See our defense case valuation piece.
Yes, indirectly. Larger comp lien = smaller net-to-plaintiff = smaller reasonable advance.
They can intervene to protect their lien but generally cannot control the case strategy.
