When to File an Offer of Judgment

Many jurisdictions across the country have methods that are aimed at encouraging parties to settle disputes without wasting the judicial resources.  This includes mediation programs, arbitration initiatives, and other incentives.  One of the most important tools for parties attempting to settle a lawsuit is an offer of judgment.  Although the exact rules for this settlement device differ from jurisdiction to jurisdiction, an offer of judgment is when a party agrees to take a judgement of a certain value against a party, or have a judgment entered against them for a set amount.  The reason why an offer of judgment must be considered carefully is since if an offer of judgment is rejected, and the rejecting party fails to succeed at trial, they can be held liable for the other party’s attorneys’ fees.  Some parties may require parties to succeed at trial for at least a set percentage above the offer of judgment amount.  Nevertheless, there are important considerations to keep in mind when deciding to file an offer of judgment.

Strength of the Case

The strength of a case is perhaps the most important consideration that must be evaluated when assessing whether to file an offer of judgment.  If you have a strong case, then it might make sense to file an offer of judgment.  This is because if the offer is rejected, and you win at trial, you will have your attorneys’ fees paid for by the other side.  However, if you have a weak case, it might not make sense to file an offer of judgment.  If you have a weak case, it is more likely you will lose at trial, and the benefit of recovering attorneys’ fees from an offer of judgment will not be realized.  In addition, filing an offer of judgment yourself may encourage the other side to file an offer of judgment, and if you have a weak case, this might create a predicament.  A skilled attorney can usually evaluate a case and determine if the causes of action are strong enough to warrant the filing of an offer of judgment.

Settlement Negotiations

Parties typically do not want to file an offer of judgment until settlement negotiations have stalled.  If parties have a good working relationship, and it seems like progress is being made toward settlement, it usually pays for the parties to try and resolve a matter without resorting to an offer of judgment.  This is because filing an offer of judgment can backfire and put a party in a difficult position during litigation.  For instance, one party may decide to file an offer of judgment for a set amount, and this might prompt the other party to file an offer of judgment themselves.  Depending on the ability of the parties to pay for the other side’s attorneys’ fees should they succeed in court, this could greatly impact the circumstances of a case.  Since there are a number of consequences that can result from an offer of judgment, it often pays to avoid filing one if settlement negotiations may be fruitful.

Counterclaims and Crossclaims

Counterclaims and crossclaims can also impact the decision to file an offer of judgment.  A counterclaim is a cause of action filed by a defendant against a plaintiff and a crossclaim is a cause of action filed against a co-defendant.  If a case involves counterclaims, it is important that a plaintiff file an offer of judgment that not only resolves the underlying claims but the counterclaims as well.  If this is not done, the case may proceed despite the fact that an offer of judgment has been accepted, which can undermine the rationale behind filing an offer of judgment.

Crossclaims can also complicate the decision to file an offer of judgment.  Offers of judgment between a plaintiff and defendant may not resole all crossclaims defendants have between them, especially when crossclaims do not relate to indemnification, contribution, or issues related to the underlying lawsuit.  As a result, the position of the defendants will also have a substantial impact on the decision to file an offer of judgment.

Types of Relief

The type of relief requested in a lawsuit will also have an impact on the decision to file an offer of judgment.  Many jurisdictions only allow offer of judgments if the claims existing in the lawsuit at that time seek money damages and not equitable relief such as an injunction, a declaratory judgment, and similar causes of action.  Even if a lawsuit does ask for equitable relief as well as damages, it is possible to discontinue the equitable claims for the purposes of filing an offer of judgment.  However, the equitable relief requested in a lawsuit may be important to the parties, and as a result, litigants may not want to discontinue equitable causes of action just for the purpose of filing an offer of judgment.  Attorneys need to have frank conversations with their clients about the objectives of litigation before deciding if it is worth it to discontinue equitable causes of action for the sake of filing an offer of judgment.

Although offers of judgment can sometimes be complex, The Rothman Law Firm has substantial experience filing offers of judgment and responding to these filings.  If you are looking for an experienced New York and New Jersey litigation attorney to handle your offer of judgment or other legal matter, please feel free to contact The Rothman Law Firm to request a free consultation.