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 Virginia, the offer of judgment rule is governed by Rule 3:22 of the Virginia Supreme Court Rules, which is similar to Rule 68 of the Federal Rules of Civil Procedure. Under this rule, a defendant can make a formal offer to settle the monetary claims against them for a specified sum, plus costs accrued to the date of the offer. If the plaintiff rejects the offer and fails to obtain a more favorable judgment, the plaintiff may be required to pay the defendant's post-offer costs, excluding attorney fees. Unlike the federal rule, Virginia's rule does not provide for the recovery of attorney fees unless such fees are specifically provided for by contract or statute. It's important to note that the application of this rule can be complex and may vary depending on the specifics of the case and the court's interpretation. Therefore, consulting with an attorney for guidance on the strategic use of an offer of judgment in Virginia is advisable.