In federal court—under Rule 68 of the Federal Rules of Civil Procedure—and in many states, there is an offer of judgment or offer of settlement procedure in which a party defending against a claim (defendant) may make an offer of judgment, or either party may make an offer of settlement.

If the party that receives the offer rejects it and does not win a better result at trial, the party who rejected the offer may be required to pay the offering party’s attorney fees and costs incurred after the offer was made.

An offer of judgment is an offer to allow a judgment to be taken against the party offering the judgment. An offer of judgment admits to liability and damages for a specific amount. An offer of settlement is similar but is in the form of an agreement or contract for settlement rather than a judgment from the court for the offered amount.

Laws vary from state to state and a state’s offer of judgment or offer of settlement procedure is usually located in its rules of civil procedure of code of civil procedure (statutes).

Under Rule 68 of the Federal Rules of Civil Procedure, a defendant in a federal court case can make an offer of judgment, and either party can make an offer of settlement. This rule is designed to encourage settlement by imposing potential costs on a party who rejects a settlement offer and then fails to obtain a more favorable judgment at trial. Specifically, if the offeree rejects the offer and the final judgment is not more favorable than the offer, the offeree may have to pay the offeror's post-offer costs, including attorney's fees. In Alaska, similar provisions are found in the Alaska Rules of Civil Procedure. Rule 68 of the Alaska Rules mirrors the federal rule and allows a party to make an offer of judgment with similar consequences for the party rejecting the offer if they do not achieve a better outcome at trial. It's important to note that the specifics of how these rules are applied can vary, and the exact consequences depend on the details of the offer and the outcome of the case.