Offer of Judgment — a legal strategy sometimes used in managing and settling employment-related
litigation. An offer of judgment applies in the following manner: if a specific
settlement made by a defendant (deemed an "offer of judgment") is
rejected by the plaintiff, but the jury's verdict is lower than the
defendant's offer of judgment, then the plaintiff who rejected the offer of
judgment will be subject to specific penalties that are paid to the defendant
who made the offer of judgment. Although the amounts of such penalties vary by
state, they include certain legal fees, other litigation costs, and
pre-judgment interest. In addition, the party that rejected the offer may lose
its right to collect attorneys' fees, compensable litigation costs, and
pre-judgment interest. An offer of judgment therefore puts pressure on
plaintiffs to accept reasonable offers.