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).

In Arizona, the offer of judgment rule is similar to Rule 68 of the Federal Rules of Civil Procedure. Under Arizona Rules of Civil Procedure, Rule 68, a defendant can make an offer of judgment to the plaintiff, which the plaintiff can accept or reject. If the plaintiff rejects the offer and fails to obtain a more favorable verdict at trial, the plaintiff may be required to pay the defendant's post-offer costs and attorney fees. This rule encourages settlement by creating a financial risk for plaintiffs who refuse reasonable settlement offers and then do not achieve better outcomes in court. It's important to note that the specifics of how offers of judgment work, including the timing and the consequences of rejecting an offer, can vary, so it's advisable to consult with an attorney for guidance on the strategic use of this rule in litigation within Arizona.