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,' which is an offer to allow a judgment against them for a specified amount, effectively admitting liability and agreeing to pay that amount. Similarly, either party in a case can make an 'offer of settlement,' which is a proposal to resolve the dispute outside of court, typically through a contractual agreement. If the offeree rejects the offer and fails to obtain a more favorable judgment at trial, they may be required to pay the offeror's attorney fees and costs from the time after the offer was made. In Maryland, the procedure for offers of judgment is governed by Maryland Rule 2-521. This state rule aligns with the federal rule in that it encourages parties to settle by imposing potential cost consequences on a party who rejects a settlement offer and then fails to achieve a better outcome at trial. It's important to note that the specifics of how these offers work and the consequences of rejecting them can vary, so it's advisable to consult with an attorney for guidance on the implications of making or responding to such offers in Maryland.