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 New York, the concept of an offer of judgment is governed by both federal and state laws. Under Rule 68 of the Federal Rules of Civil Procedure, a defendant in a federal court case can make an offer of judgment to the plaintiff. If the plaintiff rejects this offer and fails to obtain a more favorable verdict at trial, they may be required to pay the defendant's post-offer attorney fees and costs. New York does not have a direct equivalent to Federal Rule 68, but it does have similar provisions under its Civil Practice Law and Rules (CPLR). Specifically, CPLR 3220 allows a defendant to make an offer to liquidate damages, and CPLR 3219 allows for an offer to confess judgment for a sum that can be accepted by the plaintiff, potentially leading to cost implications similar to those under Rule 68 if the offer is not accepted and the plaintiff fails to obtain a more favorable judgment. It's important to note that the specifics of these rules and their application can be complex, and consulting with an attorney for guidance on strategic use of these procedures is advisable.