Should I accept an Offer of Judgment?

An “Offer of Judgment” is a formal settlement proposal made by a defendant after a lawsuit has been filed, but prior to trial, offering to settle the claim underlying the action and to stipulate to a judgment for a specific amount of money. In Washington, Civil Rule 68 sets the deadline to propose an offer of judgment at ten days prior to the first day of trial.

Offers of judgment can be an important tool for defendants and are important for plaintiffs to understand. The purpose of offers of judgment is to encourage early, fair, and reasonable settlements. The upside for plaintiffs is the ability to enter the offered judgment with the court and to collect on it. However, the downside for plaintiffs who do not accept an offered judgment can be quite costly: if the plaintiff chooses not to accept the offer, and ultimately ends up getting an award of less than was offered, the plaintiff must pay the defendant’s costs incurred after the offer of judgment was offered. Division 1 of the Washington State Court of Appeals has said “[t]his provides a tactical advantage intended to encourage settlement.” Rufin v. City of Seattle, 199 Wash. App. 348, 361, 398 P.3d 1237 (2017).

It is the general rule that each party pays its own attorneys’ fees. However, certain statutes and some contracts provide for the prevailing party to recover their attorneys’ fees from their opponent. In such cases, those attorneys’ fees are not automatically included in an offer of judgment unless the offer explicitly says so in writing. If, in the context of the Washington Law Against Discrimination, the offer of judgment does state that the offer is inclusive of fees and costs, and the plaintiff turns it down but does not get an award higher than the offer of judgment, the effect of the offer of judgment is not to shift the responsibility of the defendant’s fees onto the plaintiff, but rather to require the plaintiff to “bear their own post-offer costs including attorney fees.” Minger v. Reinhard Distrib. Co., 87 Wash. App. 941, 949, 943 P.2d 400 (1997).

Importantly, the rule also provides that “[t]he fact that an offer is made but not accepted does not preclude a subsequent offer.” So, while turning down an offer of judgment requires an analysis of whether the plaintiff is likely to better their position at trial, doing so does not foreclose on the possibility of further negotiations down the road.