Offers to Settle: You Could End Up Owing Attorneys Fees

As a general rule, you cannot get your attorneys fees repaid to you in a case, even if you win, unless you have a contract that says that you do, or unless there is a law that provides for attorneys fees to the victorious party.

But there is actually another way to get attorneys fees in your commercial litigation lawsuit: An Offer of Judgment, or OJ. But as you will see, an OJ can also lead to you owing attorneys fees to the other side.

How the Rule Works

The rule works this way.

A party that wants to settle a case, makes an offer to the other side once the case is in litigation. There are formalities to the way the offer must be made, and what language must be in the offer, to make it valid.

A Defendant being sued can make the offer (sometimes called a Proposal for Settlement) to settle the case. If that offer is accepted, the case is over for whatever the amount offered was — there are no attorneys fees, just the amount stated in the Proposal.

If the offer is rejected by the Plaintiff and case goes to trial, and the Plaintiff (the party suing) wins, but wins less than 75% of the Defendant’s previously-rejected offer, the Plaintiff will owe the Defendant attorneys fees, even if the Plaintiff “wins” the case.

To illustrate, imagine that a Defendant makes an offer of $50,000 to settle a case, and the Plaintiff rejects it. Seventy five percent of that is $37,500. If the Plaintiff wins, say, $30,000 at trial, that is less than 75% of the original $50,000 offer.

That means that even though the Plaintiff “won” the case, by winning $30,000, the Plaintiff — the victorious party — would have to pay the Defendant’s attorneys fees, because the Plaintiff did not win enough to meet the $37,500 threshold. In some cases, if the attorneys fee owed by the Plaintiff are more than what the Defendant owes the Plaintiff pursuant to the judgment, the Plaintiff — again, the “winning party” –would have to pay the Defendant.

When Defendants Make Offers

A Plaintiff who makes an OJ which the Defendant rejects will get attorneys fees if, at trial, the Plaintiff wins 25% more than what was offered by the Plaintiff.

So, let’s imagine a Plaintiff makes a $50,000 offer, which the Defendant rejects. If the Plaintiff at trial wins more than $87,500 (the $50,000 original offer, plus 25% or $37.500), the Defendant would have to pay the Plaintiff’s attorneys fees.

Should You Settle?

When and if you are served with an OJ or Proposal for Settlement, your attorneys will go over the math with you, and explain the likelihood of having to pay the other side’s attorneys fees if the offer is rejected.

If rejecting an offer seems risky, because of having to pay attorneys fees, it’s because it is and is supposed to be; the rule is there to encourage parties to settle, and to punish those who reject what are otherwise reasonable offers to resolve cases.

Call our Fort Lauderdale business law attorneys at Sweeney Law P.A. at 954-440-3993 for help making the important decisions in your business litigation case.

Source:

casetext.com/rule/florida-court-rules/florida-rules-of-civil-procedure/rules/rule-1442-proposals-for-settlement