Civil Justice Reform

Date: March 05, 2014

Among small business owners, the cost of a lawsuit ranks second only to the cost of health insurance as an impediment to business growth and opportunity. Small business owners are often just one frivolous lawsuit away from being forced to close their doors. And it usually does not matter whether the small business owner wins the case because, win or lose, the small business owner incurs the costs of attorneys’ fees, higher insurance premiums and time spent away from the business to mount an effective defense.

That is why legislation to lower the statutory pre- and post-judgment interest rate from twelve percent to six percent (House Bill No. 7501 filed by Rep. Marcello) is so important. In testimony before the General Assembly’s House Judiciary Committee, NFIB testified to the excessive rate hurting the state’s business climate and being an impediment to the equitable administration of justice as it incentivizes delay in settlements.

Another bill (House Bill No. 7502) would change the date for application of the interest rate from the date the cause of action accrued or the date of the incident to the date the lawsuit is filed. Evidence prepared by Rep. Morgan was presented to the Judiciary Committee that interest is a significant portion of most monetary awards – sometimes more than half – and that the filing of lawsuits is often delayed until the statute of limitations of three years has almost expired in Rhode Island. Justice delayed is justice denied.  

Another chart showed that in both the rate of interest and the time of its application, Rhode Island is an outlier among the fifty states. As the representative from the League of Cities and Towns noted, a lawsuit should not be an individual’s best investment in Rhode Island.

Rep. Marcello’s bills, and similar bills filed by Rep. Morgan, deserve passage in 2014.

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