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.