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By: Robert J. Jellen

On May 28, 2021, Governor Pritzker signed into law the Illinois Prejudgment Interest Act, which goes into effect on July 1, 2021.  This law imposes prejudgment interest on personal injury and wrongful death claims in the State of Illinois at a rate of 6% per year.  This means that the defendant will be liable for 6% interest on the final judgment from the date the case is filed.  Before this Act, only post-judgment interest was imposed against defendants, which gives plaintiffs interest on judgments accruing after the judgment is awarded.  Now, plaintiffs are entitled to interest on judgments commencing from the date the claim is filed.  This is important, both as a plaintiff and as a defendant in a personal injury or wrongful death claim.

For defendants, this change encourages earlier settlement and faster resolutions to personal injury and wrongful death claims.  From the time the cause of action is filed, the clock is ticking to either settle the case, or possibly bring the case to trial.  Prejudgment interest should factor into how defendants handle cases.  Bringing a case to trial quickly may happen, but generally the pretrial process is long and arduous, resulting in multi-year litigation.  Settlement, case management, and trial strategy have become even more essential to reaching an efficient and cost-effective resolution.

Another wrinkle in the Act could affect settlements as well.  The Act provides that if the highest settlement offer from the past 12 months is greater than the final judgment, no prejudgment interest will be assessed.  However, if that settlement offer is lower, prejudgment interest will apply.  This means that defendants will be encouraged to offer higher settlement amounts in order to not only resolve the case more quickly, but also to hedge against a higher judgment.

While defendants may see a disadvantage, plaintiffs will have more bargaining power in the resolution of their claims.  Prejudgment interest is a motivator for defendants to resolve personal injury and wrongful death claims.  If a defendant is possibly accruing interest the entire time the case is proceeding, that defendant may become more inclined to settle the claim.  It is important to note that plaintiffs are encouraged to accept reasonable settlement offers from defendants. Again, plaintiffs will not collect prejudgment interest on judgments if defendant has tendered an offer higher than that judgment amount within the past 12 months.  Plaintiffs will also not be given prejudgment interest on attorney’s fees, punitive damages, sanctions, or costs awarded by statute.

From the time the claim is filed, defendants are encouraged to resolve the claim as quickly as possible in order to avoid interest. For plaintiffs, the clock begins ticking from the time the injury starts to the time the case is filed.  Remember, prejudgment interest starts when the claim is filed, not the date of the injury.  Therefore, Plaintiffs should bring personal injury and wrongful death claims as quickly as they can, otherwise, Plaintiffs will lose out on possible prejudgment interest and leave money on the table.

If you have a personal injury or wrongful death claim, or someone has a personal injury or wrongful death claim against you, it is important to understand how this new law affects you.  Whether plaintiff or defendant, having an attorney who is cognizant of the application of prejudgment interest when handling your case is more important than ever.  The Litigation Team at Mathis, Marifian & Richter, Ltd., handles claims for both plaintiffs and defendants for personal injury and wrongful death.  If you would like to discuss a case, please give us a call.

Professional Services Disclaimer: Please note that the information presented here is as an educational service, and while it contains information about legal issues, it is not legal advice. No warranty is made regarding the applicability of the information presented to a particular client situation, and the information set forth is not a substitute for original legal research, analysis and drafting for a particular client situation.