Most lawyers file preverdict interest under “things the court administrator computes at the end.” It gets a line in the judgment, somebody checks the arithmetic, and nobody thinks about it again.
That is a mistake, and Minn. Stat. § 549.09, subd. 1(b) is written to make it an expensive one. The statute does not simply add interest to a judgment. It runs a comparison between the two sides’ written settlement offers and awards the interest to whichever side guessed closer to the verdict. A written offer is therefore not a negotiating gesture. It is a priced option on a category of money, and declining to make one is a decision with a number attached.
Below is what the statute says, the four decision points it creates, the rate cliff at $50,000 that almost nobody plans around, and the one sentence in the middle of subdivision 1(b) that can destroy an otherwise winning interest position.
How does preverdict interest start running in Minnesota?
Earlier than most people assume. The opening of subdivision 1(b):
(b) Except as otherwise provided by contract or allowed by law, preverdict, preaward, or prereport interest on pecuniary damages shall be computed as provided in paragraph (c) from the time of the commencement of the action or a demand for arbitration, or the time of a written notice of claim, whichever occurs first, except as provided herein. The action must be commenced within two years of a written notice of claim for interest to begin to accrue from the time of the notice of claim.
“Whichever occurs first” is the whole point of that sentence, and “a written notice of claim” is the earliest of the three. A demand letter sent long before suit can move the start date back — subject to one condition, stated in the very next sentence: the action must be commenced within two years of that written notice for interest to run from the notice date.
So there is a two-year window. Send a written notice of claim, sue within two years, and interest runs from the letter. Send the letter and wait twenty-five months, and the letter buys nothing. This is one of a family of Minnesota deadlines that runs from a fact rather than from a docket entry; the mechanics of that family are worth understanding on their own, and are covered in The Minnesota Deadlines That Ruin Cases Are the Ones With No Date on Them.
What this is worth is not small. On a judgment over $50,000, the statutory rate is ten percent per year (see below). Two years of accrual on a $400,000 judgment, at ten percent, is a number worth writing one letter for.
The offer comparison: who actually gets the interest?
Here is the operative machinery, quoted in full because every clause of it matters:
If either party serves a written offer of settlement, the other party may serve a written acceptance or a written counteroffer within 30 days. After that time, interest on the judgment or award shall be calculated by the judge or arbitrator in the following manner. The prevailing party shall receive interest on any judgment or award from the time of commencement of the action or a demand for arbitration, or the time of a written notice of claim, or as to special damages from the time when special damages were incurred, if later, until the time of verdict, award, or report only if the amount of its offer is closer to the judgment or award than the amount of the opposing party’s offer. If the amount of the losing party’s offer was closer to the judgment or award than the prevailing party’s offer, the prevailing party shall receive interest only on the amount of the settlement offer or the judgment or award, whichever is less, and only from the time of commencement of the action or a demand for arbitration, or the time of a written notice of claim, or as to special damages from when the special damages were incurred, if later, until the time the settlement offer was made. Subsequent offers and counteroffers supersede the legal effect of earlier offers and counteroffers.
Minn. Stat. § 549.09, subd. 1(b).
Unpack it into the two outcomes the statute actually describes.
| Prevailing party’s offer is closer to the verdict | Losing party’s offer is closer to the verdict | |
|---|---|---|
| What the interest is calculated on | “any judgment or award” | “only . . . the amount of the settlement offer or the judgment or award, whichever is less” |
| When it stops running | “until the time of verdict, award, or report” | “until the time the settlement offer was made” |
Read the right-hand column again, because it is the one that costs money. A losing party whose offer lands closer to the verdict does two things at once: it caps the base on which interest is computed at the lesser of the offer or the judgment, and it stops the clock as of the date the offer was made. Everything after that date is free.
That is the sense in which a written offer is an option with a price. A defendant who serves a credible written offer early in a case has purchased, for the cost of drafting a letter, the possibility of eliminating every dollar of interest that would otherwise accrue over the following two or three years of litigation. A defendant who serves nothing has declined to buy it.
The 30-day sentence is doing quiet work, too. “If either party serves a written offer of settlement, the other party may serve a written acceptance or a written counteroffer within 30 days. After that time, interest . . . shall be calculated by the judge or arbitrator in the following manner.” A party who receives a written offer and lets thirty days pass without a written counteroffer has left the other side’s number as the only one on its side of the ledger.
The sentence that ruins good interest positions
Subsequent offers and counteroffers supersede the legal effect of earlier offers and counteroffers.
Fifteen words, and they invert ordinary settlement instinct.
The comparison the statute runs is not “the best offer either side ever made.” It is the last one. Every new number wipes out the legal effect of the number before it.
Consider what that means for the most common negotiating pattern in civil litigation. A plaintiff demands high early, learns more about the case, and — as trial approaches and the cost of trying it becomes real — comes down. That is normal, sensible advocacy. It is also, under this statute, the act of replacing an offer that might have been closer to the eventual verdict with one that is farther from it.
If the jury comes back high, the plaintiff’s superseded early demand is worth nothing. The number in the comparison is the last one served.
The mirror image applies to defendants. A defendant who serves a realistic offer early and then, sensing weakness, reduces it before trial has superseded its own best-positioned number.
The practical rule that falls out of the text: your interest position is set by your last written offer, so decide what you want that number to be before you serve it. That is not an argument for refusing to move. It is an argument for knowing, at the moment you move, what you are giving up in the other column.
What preverdict interest is not available on
Subdivision 1(b) closes with five exclusions:
(1) judgments, awards, or benefits in workers’ compensation cases, but not including third-party actions;
(2) judgments or awards for future damages;
(3) punitive damages, fines, or other damages that are noncompensatory in nature;
(4) judgments or awards not in excess of the amount specified in section 491A.01; and
(5) that portion of any verdict, award, or report which is founded upon interest, or costs, disbursements, attorney fees, or other similar items added by the court or arbitrator.
Four notes on that list.
Clause (2) — future damages — is the largest carve-out in most serious injury cases. And the statute tells you how the offer gets divided for that purpose: “For the purposes of clause (2), the amount of settlement offer must be allocated between past and future damages in the same proportion as determined by the trier of fact.” Your offer does not get to be all past damages. It is split by the jury’s own proportion.
Clause (3) means punitive damages earn nothing while the case sits. In Minnesota, punitive damages cannot be pleaded in the complaint at all — they require a motion, affidavits, and a prima facie showing before they enter the case. See In Minnesota You Are Not Allowed to Plead Punitive Damages. Between the two statutes, a punitive claim is both late to arrive and interest-free once it does. Compensatory damages behave the opposite way. Delay is not neutral between them.
Clause (4) points at conciliation court. Section 549.09 cross-references “the amount specified in section 491A.01” without saying which amount, and § 491A.01, subd. 3a(a) specifies two: conciliation court has jurisdiction where the amount “does not exceed: (1) $20,000; or (2) $4,000, if the claim involves a consumer credit transaction.” The cross-reference is worth reading with care in a small case. Conciliation court’s own mechanics — including the removal window that decides most of these cases — are covered in Minnesota’s Conciliation Court Handles Claims Up to $20,000.
Clause (5) blocks interest-on-interest and interest on fees. If your case is one where attorney fees are the dominant recovery, understand that the fee award itself is outside preverdict interest.
The rate: a cliff at $50,000
This is where the statute stops being technical and starts being strategic. Paragraph (c) sets two different rates, and the gap between them is large.
At or below $50,000 — and for or against government, regardless of amount:
(c)(1)(i) For a judgment or award of $50,000 or less or a judgment or award for or against the state or a political subdivision of the state, regardless of the amount, or a judgment or award in a family court action, except for a child support judgment, regardless of the amount, the interest shall be computed as simple interest per annum. The rate of interest shall be based on the secondary market yield of one year United States Treasury bills, calculated on a bank discount basis as provided in this section.
On or before the 20th day of December of each year the state court administrator shall determine the rate from the one-year constant maturity treasury yield for the most recent calendar month, reported on a monthly basis in the latest statistical release of the board of governors of the Federal Reserve System. This yield, rounded to the nearest one percent, or four percent, whichever is greater, shall be the annual interest rate during the succeeding calendar year.
So the low-end rate floats with Treasury yields, is rounded to the nearest whole percent, and cannot go below four percent. The State Court Administrator sets it on or before December 20 for the following calendar year and publishes it; check the published figure for the year you need rather than assuming one.
Above $50,000 — one sentence, no floating, no rounding:
(2) For a judgment or award over $50,000, other than a judgment or award for or against the state or a political subdivision of the state or a judgment or award in a family court action, the interest rate shall be ten percent per year until paid.
Ten percent per year until paid. In an era where the Treasury-based rate has spent long stretches at its four percent floor, that is not a rounding difference — it can be more than double, and it applies to a judgment of $50,000.01 that does not apply to a judgment of $50,000.00.
Two consequences follow that are worth stating plainly.
First, the $50,000 line is a real planning threshold, and it sits at the same number as the pleading threshold in Minn. Stat. § 544.36 and Minn. R. Civ. P. 8.01. Minnesota uses $50,000 as its dividing line between a small civil case and a serious one in more than one place.
Second, suing a city, a county, a school district, or the state changes the rate no matter how big the case is. Paragraph (c)(1)(i) applies “for or against the state or a political subdivision of the state, regardless of the amount,” and subdivision 1(e) defines both terms — “state” to include “a department, board, agency, commission, court, or other entity in the executive, legislative, or judicial branch of the state,” and “political subdivision” to include “a town, statutory or home rule charter city, county, school district, or any other political subdivision of the state.” A $2 million verdict against a county does not carry the ten percent rate. A $2 million verdict against a private contractor does. If your case involves both, the interest exposure is not the same across defendants, and that asymmetry is worth knowing before you allocate a settlement.
After judgment, interest keeps running. Subdivision 2: “During each calendar year, interest shall accrue on the unpaid balance of the judgment or award from the time that it is entered or made until it is paid, at the annual rate provided in subdivision 1.” For a judgment holder facing a defendant who will not pay, that is a meaningful number, and it compounds the practical value of the collection tools discussed in Minnesota’s Garnishment Exemptions. For a rate comparison in the private-lending context, see Minnesota’s Usury Cap Is 8%.
One thing the statute does not say
The comparison in subdivision 1(b) is written in terms of “the amount of its offer” and “the amount of the opposing party’s offer.” The text presupposes that both sides made written offers. It does not state what happens when one side never made one.
That silence is not an invitation to guess, and this page does not resolve it. It is, however, a strong practical argument for serving a written offer: a party that has served one is inside the machinery the statute describes, and a party that has not is arguing about a situation the statute does not address.
What to do
Both sides, at the outset:
- Diary the two-year rule. If a written notice of claim went out, the action must be commenced within two years of it for interest to run from that date. Put the letter date and the two-year date in the file on day one.
- Treat the demand letter as a dated financial instrument. Send it in writing, keep proof of service, and index it. Under § 549.09 it can move the accrual start date by up to two years.
Plaintiffs:
- Serve a written offer of settlement, and serve it early enough to matter. The comparison rewards accuracy, not aggression.
- Before you lower a demand, price what you are superseding. The last number is the only one compared.
- Model the case with the future-damages exclusion applied. A verdict that is mostly future damages generates far less preverdict interest than its headline suggests, and the offer gets allocated in the trier of fact’s own proportion.
Defendants:
- Understand what an early, credible offer buys. If your offer is closer to the verdict than the plaintiff’s, interest is capped at the lesser of your offer or the judgment and stops on the day you made it.
- Do not let 30 days run on a written offer without a written counteroffer.
- Check whether your client is a political subdivision. If it is, paragraph (c)(1)(i) governs the rate regardless of the size of the case.
The observation
Rules that shift costs based on rejected settlement offers are usually described as fee-shifting rules, and lawyers evaluate them as such: a risk of paying the other side’s costs if you refuse a reasonable number.
Section 549.09 is a different animal, and it is more subtle. It does not shift anyone’s costs. It reallocates a pot of money that exists regardless — the time value of the judgment — to whichever party demonstrated, in writing and on a date certain, that it understood what the case was worth.
That is a reward for accuracy rather than for aggression, and it points in exactly the opposite direction from the way most civil cases are negotiated. The party who anchors high and refuses to move is not merely being difficult; on a large verdict, that party may be handing the other side years of interest at ten percent. The party who never puts a number in writing at all has opted out of the mechanism entirely.
Minnesota built a settlement-forcing device and filed it under “interest on verdicts, awards, and judgments.” Most litigants find it at the end of the case, when the only thing left to do is check the arithmetic. It is worth more at the beginning.
Madgett Law, LLC litigates civil claims in Minnesota state and federal court and handles the settlement mechanics that decide what a judgment is actually worth. If you are evaluating a demand, an offer, or a judgment you are trying to collect, send us a message or call 612-470-6529.
Sources: Minn. Stat. § 549.09 (interest on verdicts, awards, and judgments) — subd. 1(a) (interest from verdict to entry of judgment); subd. 1(b) (preverdict, preaward, or prereport interest; accrual from commencement, demand for arbitration, or written notice of claim, whichever occurs first; the two-year commencement condition; the 30-day response period; the closer-offer comparison; the cap and cutoff where the losing party’s offer was closer; supersession of earlier offers and counteroffers; allocation of an offer between past and future damages for purposes of clause (2); and exclusions (1)–(5) for workers’ compensation but not third-party actions, future damages, punitive damages, fines, or other noncompensatory damages, judgments not in excess of the amount specified in § 491A.01, and portions founded on interest, costs, disbursements, attorney fees, or similar added items); subd. 1(c)(1)(i) (rate for judgments of $50,000 or less, for or against the state or a political subdivision regardless of amount, and family court actions; secondary market yield of one-year United States Treasury bills; annual determination by the state court administrator on or before December 20 from the one-year constant maturity treasury yield; rounded to the nearest one percent, or four percent, whichever is greater); subd. 1(c)(2) (ten percent per year until paid, for a judgment or award over $50,000 other than one for or against the state or a political subdivision or in a family court action); subd. 1(e) (definitions of “state” and “political subdivision”); subd. 2 (accrual of interest after entry). Minn. Stat. § 491A.01, subd. 3a(a) (conciliation court jurisdiction: $20,000; $4,000 for a consumer credit transaction). Minn. Stat. § 544.36 and Minn. R. Civ. P. 8.01 (the $50,000 pleading threshold). All statutory text from the Minnesota Office of the Revisor of Statutes, 2025 Minnesota Statutes; Minnesota Rules of Civil Procedure as published by the Revisor. Currency check: the Revisor’s Table 2 shows the most recent amendment to § 549.09 as 2021 Regular Session ch. 30, art. 10, s. 78, and no 2025 or 2026 session entries for § 549.09 or § 491A.01.
The annual interest rate applicable to judgments of $50,000 or less is set and published by the Minnesota State Court Administrator under § 549.09, subd. 1(c)(1)(i). This article deliberately does not state a figure for any particular year; consult the State Court Administrator’s published rate for the year at issue.
This article is general legal information about Minnesota law, not legal advice, and reading it does not create an attorney–client relationship. Whether interest is available, at what rate, and from what date depends on the claim, the parties, the offers actually served, and the forum. Do not use this article to compute interest in your own matter. No outcome is promised or implied.