SENATE BILL REPORT

SB 6817

BYSenator Nelson

Regulating costs pertaining to court proceedings.

Senate Committee on Law & Justice

Senate Hearing Date(s):January 29, 1990

Senate Staff:Dick Armstrong (786-7460)

AS OF FEBRUARY 1, 1990

BACKGROUND:

Statutes control the rate and duration of interest accrual on judgments.  Separate provisions apply to judgments based on certain contracts, unpaid child support, to judgments against government entities for their tortious conduct, and to all other judgments.  If a written contract itself provides for interest, then any judgment based on the contract bears interest at the contract's rate.  Judgments for unpaid child support accrue interest at the rate of 12 percent.  Judgments against governmental entities for their tortious conduct, and all other judgments not based on a contract accrue interest from the date of entry of the judgment and at the usury rate.  The usury rate applicable to judgments is the higher of 12 percent or 4 percent above the interest rate on 26-week treasury bills.

The Washington State Supreme Court created the Novack Commission for the purpose of studying attorney fee practices involving litigation in Washington.  The Novack Commission made several recommendations regarding the formation of contingent attorney fee agreements and what should be disclosed to clients.

SUMMARY:

Prejudgment interest is provided in any action based on fault (i.e. negligent or reckless conduct) where a claimant makes a written offer of settlement, which is not accepted by the defendant, and the offer is more favorable than the judgment. 

Prejudgment interest applies only to unpaid past economic damages.  The prejudgment interest rate is the treasury rate, as established by the Federal Reserve Bank in San Francisco, and accrues from the date of the claimant's first offer of settlement which exceeds the judgment to the date of entry of the judgment.  Provisions of the act apply to any judgment debtor, whether public or private.  Attorneys may not receive as compensation any part of the prejudgment interest.

A statute is enacted which governs contingent attorney fees.  The statute adopts existing sections of court rules on contingent attorney fees, as modified by the Novack Commission.  Contingent fees consisting of a percentage are to be based on the net amount recovered for the client.  Contingent fees are to be in writing and must state the method by which a fee was determined.  If an agreement is not in writing, it includes the work necessary to handle appeals and collect judgments. 

If the recovered amount is to be paid in the future, fees are to be based on the net recovery or on the actual cost of the recovery.  If the actual cost is unknown, the present value of the payments are to be used.

Appropriation:  none

Revenue:   none

Fiscal Note:    requested