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 Tennessee, the offer of judgment or offer of settlement procedure is governed by Tennessee Rules of Civil Procedure Rule 68, which is similar to Federal Rule 68. Under this rule, a defendant can make an offer of judgment to the plaintiff, proposing to settle the case for a specified amount. If the plaintiff rejects the offer and fails to obtain a more favorable judgment at trial, the plaintiff may be required to pay the defendant's post-offer attorney fees and costs. This rule encourages parties to settle disputes before trial to avoid additional legal expenses. It's important to note that the specifics of how the rule is applied can vary, and there may be certain limitations or conditions under Tennessee law. An attorney can provide detailed guidance on how Rule 68 operates in Tennessee and the strategic considerations involved in making or responding to such an offer.