Illinois Legislature Adopts Prejudgment Interest Amendment
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Illinois Legislature Adopts Prejudgment Interest Amendment

KEY TAKEAWAYS

  • The Illinois Legislature has amended the state’s code of civil procedure to permit six percent per annum prejudgment interest to all judgments on damages for personal injury and wrongful death

  • Prejudgment interest begins to accrue on the date the case is filed after July 1, 2021, and applies to all qualifying pending cases starting July 1, 2021

  • Prejudgment interest does not apply to punitive damages and the amount permitted will vary based on the highest written settlement offer

 

On May 31, 2021, Illinois Gov. J.B. Pritzker signed an amendment into law to permit six percent prejudgment interest in all actions for the recovery of personal injury and wrongful death. Local public entities are excluded from the prejudgment interest requirement. Prejudgment interest will begin to accrue on the date the case is filed. As to existing cases, prejudgment interest will begin to accrue on the effective date of the statute, July 1, 2021. Prejudgment interest is capped and shall accrue for no longer than five years.

The act does provide a mechanism to reduce or avoid prejudgment interest. If a judgment is greater than the amount of “highest written settlement offer made by the defendant” and such offer is rejected by the plaintiff, then the interest added will be on the difference between the amount of judgment and the amount of the highest written settlement offer. In contrast, if the judgment is equal to or less than the amount of the highest written settlement offer, then no prejudgment interest will be added to the amount of the judgment.

As a practical matter, defendants and insurance companies must now diligently communicate all settlement offers in writing so that the amount of prejudgment interest can be reduced or eliminated relative to amount of the judgment. We continue to recommend that clients reject any attempt by a plaintiff to factor in prejudgment interest as part of any settlement package or negotiation.

The statutory amendment, and relevant language, can be found at 735 ILCS 5/2-1303(c).

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