It’s sexier than you think
By L. Steven Emmert, The Journal – Vol. 21 No. 1 2009
Every plaintiffs trial lawyer is looking for ways to beef up the size of judgments. Lawyers study time-honored techniques of evidence presentation, measured by jurors likely reactions, to make damage claims stick and to produce the largest number possible to the right of the dollar sign.
In studying these techniques, many trial lawyers pay little attention to the relatively mundane subject of judgment interest. Oh, they know its there, and they know that any judgments they recover will start cranking out interest at the less-than-munificent rate of 6 percent per annum. But it seems to them that interest is little more than what the Gulf Coast Creoles call a lagniappe a little something extra thrown in by a merchant, usually as a gesture of goodwill. Face it virtually no one focuses on judgment interest as hes preparing for trial.
But this is an area where minimal effort can enhance the value of your judgment by 10, 15, even 20 percent or more, depending on the amount of time between the accrual of the cause of action and the date you collect. If youve got a significant tort case, then you need to devote a little more attention to this underappreciated tool.
Pre-judgment and post-judgment interest
The foundation for imposition of interest on judgments is ancient: [I]t is natural justice that he who has the use of anothers money should pay interest for it. Jones v. Williams, 6
Heres the statute (in pertinent part) cited by the court:
The second sentence quoted above is the mandatory imposition of post-judgment interest. (Note that if a jury decides your case and the judge enters judgment months later, you get interest from the date of the verdict.) The first sentence authorizes the finder of fact to start the running of interest at a different time, which logically cannot be later than the date of verdict or judgment. It is this first sentence that gives the practitioner the opportunity to enlarge his or her recovery.
A sample timeline
Plaintiff is seriously injured in a collision on
It cant. Plaintiffs lawyer then gets good service of process on defendant on
The parties agree on a trial date of
Does this timeline sound familiar? We have all seen cases, especially significant and complex ones, that take four years to get to judgment, like this hypothetical one. Unfortunately, plaintiffs lawyer has left a quarter million dollars on the table by 14 The Journal of the Virginia Trial Lawyers Association, Volume 21 Number 1, 2009
neglecting to seek pre-judgment interest. The bigger your case, and the more time that passes between accrual and verdict, the more you need to press for pre-judgment interest.
First and foremost, you need to include a request for prejudgment interest in your complaint. Thats as simple as including the following sentence in your ad damnum clause: Plaintiff also moves for an award of pre-judgment and post-judgment interest.
Second, you need to craft a jury instruction that tells the jury that it has the right to fix the date from which interest begins to run. You wont find one in Virginia Model Jury Instructions, but you emphatically have a statutory basis for doing so. Based on the Code section, I recommend something like this:
Third, bring a jury verdict form that includes a provision for interest on the damages, and include a blank for the date, which can be filled in by the foreman.
Finally, ask the jury for interest starting with the date of the injury! Most jurors will understand the reason why interest should be allowed. The plaintiff in our hypothetical started suffering in mid-2006, but probably wont get any money until at least 2011 and that assumes the defendant doesnt appeal. Obviously, you shouldnt spend a great deal of time on this issue in closing. In fact, your argument will be stronger if you keep it short and confident.
The Holy Grail – compound interest
Most of you recognize that judgment interest is at a simple rate of 6 percent, with no compounding. The
And yet there is one carefully hidden provision that allows a prevailing plaintiff to collect compound interest, albeit for a limited time. Code §8.01-682 provides that if a judgment is affirmed by the Supreme Court, then the appellee is entitled to damages. It then includes this statutory bon mot:
Such damages, when the judgment is for the payment of money, shall be the interest to which the parties are legally entitled, from the time the appeal took effect, until the affirmance. Such interest shall be computed upon the whole amount of the recovery, including interest and costs, and such damages shall be in satisfaction of all interest during such period of time.
This statute doesnt specify what date is intended by the phrase, the time the appeal took effect, but the most plausible date for that is when the notice of appeal is filed. From that date until the date of issuance of the Supreme Courts mandate (the formal order implementing the Supreme Courts ruling) can easily be as much as 18 months. Thats a year and a half of compounding, which is far more valuable if you have a fair amount of pre-judgment interest already awarded. (Note that this provision only applies when the Supreme Court grants the defendant a writ, and then affirms. It doesnt apply where the appellate court refuses a petition for appeal.)
Lets see how these numbers play out in our hypothetical. If the plaintiffs lawyer eschews the pursuit of maximum interest, then Plaintiff is entitled to simple interest at 6 percent from September 3, 2010 until, say, July 1, 2012 when the defendant pays after losing the appeal. That interest comes to about $110,000. But if he follows all of the advice in this essay, and gets interest from the date of the injury, then the interest recovery is around $390,000. And the difference between these two figures, my friends, is quite sexy indeed.
The total amount of time required to complete all of the four steps I recommended above, is on the order of five minutes, tops. If you arent pressing for interest on your judgments, then youre taking money out of your clients pocket, and out of your own.
L. Steven Emmerts practice focuses exclusively on appellate advocacy in the state and federal courts. He is with the