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,' and either party can make an 'offer of settlement.' This rule is designed to encourage settlement by imposing potential costs on a party who refuses a reasonable offer and then fails to obtain a more favorable judgment at trial. Specifically, if the offeree rejects the offer and the final judgment is not more favorable than the offer, the offeree must pay the costs incurred by the offering party after the offer was made, which may include attorney's fees. An offer of judgment is a formal admission of liability for a certain amount, while an offer of settlement is more like a contractual agreement to resolve the dispute. In West Virginia, similar procedures are governed by state laws and rules, which can be found in the West Virginia Rules of Civil Procedure and relevant state statutes. These rules dictate how offers of judgment and settlement are to be made, any specific requirements for such offers, and the consequences of rejecting an offer and then failing to achieve a better outcome at trial.