NCJ Number
97081
Journal
Judges' Journal Volume: 23 Issue: 4 Dated: (Fall 1984) Pages: 12-16,44-49
Date Published
1984
Length
11 pages
Annotation
Two practicing attorneys debate the pros and cons of prejudgment interest, the imposition of an interest penalty between the date of breach of contract or occurrence of the tort and the eventual date of judgment.
Abstract
The proponent of prejudgment interest contends that the economic incentive for major insurers to delay adjustment, settlement, and trial of disputed claims in order to generate investment income is enormous. Plaintiffs' attorneys are partly responsible for the problem, since they traditionally ask far more than would be accepted in settlement and then progressively reduce their demands. The best solution is not to criticize the advocate, but to eliminate the economic incentive for delay by instituting prejudgment interest. Under this scheme, the court determines the amount of money owed the plaintiff, and the defendant or insurance company must pay interest on the money that has been used profitably during the litigation period. The interest is assessed only if the case is not settled and the court has to determine liability and damages. The attorney opposing prejudgment interest argues that it improves the plaintiff's bargaining position by providing another element of damages, without an offer of judgment or element of damages, without an offer of judgment or settlement. The plaintiff's best argument for prejudgment interest is the case involving actual out-of-pocket damages and clear liability. There is, however, a constitutional argument against such a damage component. A better method to eliminate backlogs is careful management of the pretrial procedure using rigid deadlines. Footnotes are included.