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. Similarly, either party in a case can make an 'offer of settlement,' which is a proposal to resolve the dispute through an agreement rather than a court judgment. In Pennsylvania, the state follows a similar procedure to the federal rule, which is outlined in the Pennsylvania Rules of Civil Procedure. If the offeree rejects the offer and fails to obtain a more favorable verdict at trial, they may be required to pay the offering party's attorney fees and costs from the time after the offer was made. This rule encourages parties to settle disputes before trial and avoid unnecessary litigation costs. It's important to note that the specifics of how these offers are made and the consequences of rejecting them can vary, so it is advisable to consult with an attorney for guidance on making or responding to such offers in Pennsylvania.