The University of Chicago Business Law Review
Start Page
178
Abstract
Courts routinely miscalculate pre-judgment interest, thereby failing to fully restore injured parties. Because pre-judgment interest can be substantial—often rivaling or even exceeding the underlying award—errors in its calculation are important and may create distorted incentives, promote opportunistic behavior, and suppress investment and economic activity. These errors often stem from reliance on speculation to determine the costs covered by interest. This Article argues that such speculation is unnecessary. The litigation claim is identified as the asset which has burdened the injured party with risks and costs imposed by the wrongful act, eliminating the need to rely on a hypothetical asset to estimate costs. From this premise, one can derive the appropriate rate of interest required to restore the claimant to the position he or she would have occupied absent the harm. Grounded in empirical evidence and established financial principles, this framework offers a rigorous and practicable alternative to prevailing methodologies.
Recommended Citation
Lu, Yijia and Vincent, Scott
(2025)
"Risk, Return, and Restoration: A Fundamental Approach to Pre-Judgment Interest,"
The University of Chicago Business Law Review: Vol. 5:
No.
1, Article 5.
Available at:
https://chicagounbound.uchicago.edu/ucblr/vol5/iss1/5