Your personal injury case is on the verge of resolving (finally) but now your attorney is talking about pre-judgment and post-judgment interest. You can see the light at the end of the tunnel and just want to wrap up the case and get on with your life but wonder:

  • What is pre-judgment and post-judgment interest?
  • Will it drag out your case even longer — for no good reason?

Pre-Judgment and Post-Judgment Interest

If you are awarded a monetary award in a court settlement, you may be entitled to pre-judgment or post-judgment interest on the total award, meaning that you may be able to collect interest on the amount due to you from the time period before the case was settled (pre-judgment), and/or from the time the case is settled to the time the money is actually paid to you (post-judgment).

The exact time period at which the interest begins to accrue is usually determined based on the type of case. In an accident case, pre-judgment interest would run from the date of the injury, while post-judgment interest would typically begin to accrue only after the judgment was entered.

Colorado Law

Personal injury cases can take many months and even years to conclude, and many jurisdictions grant courts wide discretion in calculating pre-judgment and post-judgment interest to compensate for the loss of the use of funds and the effects of inflation. In Colorado, both pre-judgment and post-judgment interest are allowed in tort cases:

  • Pre-judgment interest in a tort case begins to run from the date of the injury or incident that gave rise to the lawsuit at the rate of 9 percent compounded. For medical malpractice actions, pre-judgment interest will accrue between the date the action ensues and the date of filing the action. It is considered part of the damages and thus included in the statutory limitation of $250,000 on non-economic damages and limitation of $1 million total damages per patient.
  • Post-judgment interest accrues from the date of judgment at the rate of 9 percent compounded annually, unless judgment debtor appeals. In this instance, the rate will be two percentage points above the discount rate certified by the Secretary of State on January 1 of the current year, compounded annually.

How Much Difference Can a Small Percentage of Interest Really Make?

At first glance, it might seem that pre-judgment and post-judgment interest would be of only minor significance, since only a small percentage is tacked on to the principal award. But, as time between the injury and the judgment grows, as it often does in complicated litigation, the potential impact of pre-judgment and post-judgment interest grows along with it.

Pre-judgment interest is meant to put a plaintiff in the same position he would have been had he not suffered the injury, and is perceived as an award for the time value of money that was wrongfully withheld by the defendant. While the intent is to compensate the plaintiff for the wrongful withholding of money or property, an interest award can actually be a windfall for the plaintiff and a penalty to the defendant for drawing out settlement negotiations or trial.

Image by Mystico972

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