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.' If the offeree rejects the offer and fails to obtain a more favorable judgment, they may be required to pay the offeror's post-offer attorney fees and costs. An offer of judgment involves the defendant agreeing to let a judgment be entered against them for a certain amount, essentially admitting liability and agreeing to pay damages. An offer of settlement, while similar, is more like a contractual agreement to settle the matter. In Hawaii, the state's specific procedures for offers of judgment or settlement are governed by its own rules of civil procedure, which may differ from the federal rules. It is important for parties in Hawaii to consult these state-specific rules to understand the implications of making or responding to such offers in state court proceedings.