CJAC: Civil Justice Association of California

Senate Bill 393

Senate Bill 393, authored by Senator Tom Harman, would bring California's judicial interest rate up to date and ensure that defendants during legal appeals are paying interest at a rate comparable to market rates.

Since 1982, the interest rate in California for prejudgment and postjudgment interest has been fixed at the rate of 10% per year. Most key interest rates today fluctuate between 4% and 7% -- far below California's fixed rate. This high rate means a defendant who appeals a verdict must pay 10% interest on top of the judgment -- an unfair windfall to the plaintiff and the plaintiff's lawyers.

Senate Bill 393 will set the judicial interest rate at the prime rate plus 2%. Changing the rate, while not noticed by many, would be recognized by business leaders nationally as an important change to make California more welcoming to business.

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