Last month, an important piece of legal news was reported in the Louisiana Bar Journal regarding the judicial interest rate in Louisiana. Its effects could have significant implications for your personal injury case.
In short, the courts have decided to raise the judicial interest rate to 8.75% in 2024. This is a significant hike compared to last year, and continues a trend of growing interest rates since 2022.
Below, our team of New Orleans personal injury lawyers breaks down what exactly a judicial interest rate is, and how the 2024 rate will affect your case.
What is a judicial interest rate?
The term “judicial interest rate” refers to the rate of interest ordered as part of a judgment in a legal case. When a court renders a judgment in favor of one party and orders the other party to pay a sum of money, there is also a specific interest rate that will apply to the amount owed.
The purpose of the judicial interest rate is to compensate the prevailing party for the time value of money. In other words, it accounts for the fact that the money awarded in the judgment is worth more at the time of the judgment than it will be at the time of payment in the future.
For plaintiffs in civil cases in Louisiana, the concept of a judicial interest rate holds significant financial implications. When a court awards damages in favor of a plaintiff, it’s not uncommon for the full compensation to be paid over an extended period. The judicial interest rate is a critical factor in ensuring that the awarded amount retains its real value over time.
Louisiana judicial interest rate in 2024
In Louisiana, the judicial interest rate for the following year is determined every fall by the Louisiana Commissioner of Financial Institutions. The Commissioner’s determination is then published in the Louisiana Bar Journal.
In determining the judicial interest rate, the state must strike a delicate balance between fairness to plaintiffs and the financial realities of defendants. They typically consider factors such as inflation, prevailing interest rates, and current trends in civil lawsuits. Striking this balance is crucial for the justice system to provide restitution to plaintiffs without unduly burdening defendants.
The judicial interest rate in Louisiana has fluctuated between about 3% and about 12% over the last several decades. But in the last 10 years, the state has been setting the rate on the lower end:
- 2024 – 8.75%
- 2023 – 6.5%
- 2022 – 3.5%
- 2021 – 3.5%
- 2020 – 5.75%
- 2019 – 6.00%
- 2018 – 5.00%
- 2017 – 4.25%
- 2016 – 4.00%
- 2015 – 4.00%
- 2014 – 4.00%
2024 is the second year in a row that the Louisiana legislature has increased the judicial interest rate, and it’s possible that the rate will increase by even more next year.
What this means for your Louisiana personal injury case
Plaintiffs benefit from a higher interest rate, as it compensates them for the delay in receiving the funds, covering the time value of money.
Personal injury victims, for example, may face ongoing medical expenses and financial strain, and an appropriate judicial interest rate becomes a means of equitable compensation that considers the economic realities of the post-judgment period. If you suffered an injury in an accident and you’re pursuing compensation from the responsible party, the 2024 judicial interest rate hike is probably good news for you.
For defendants, however, the judicial interest rate represents an additional financial burden. In cases where a defendant is ordered to pay damages, the interest rate adds to the overall amount owed. If you are on the receiving end of a lawsuit, the 2024 judicial interest rate hike is not ideal.
Generally, judicial interest rates are most commonly associated with civil cases. In contrast, criminal cases typically do not involve the same considerations for interest rates.
That said, laws and regulations can vary across jurisdictions, and there may be exceptions or specific circumstances where interest rates could be applicable in criminal cases or other legal contexts. It’s essential to consult an experienced Louisiana attorney to take a look at the specific laws and rules question, so you can understand the nuances of your case and determine how the new judicial interest rate may or may not apply to your situation.