Navigating the Maze of Offers of Judgment In Fee-Shifting Cases

January 25, 2010Articles New Jersey Law Journal

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The offer of judgment rule is designed to promote the early settlement of disputes. It does so by discouraging the rejection of rea­sonable settlement offers, by shifting litigation costs and attorneys’ fees to parties who refuse reasonable offers to settle.

New Jersey’s version of the offer of judgment Rule 4:58-1 et seq is loosely modeled on the federal offer of judgment rule (F.R.C.P. 68), but differs in several key aspects, most notably that only defendants can make offers of judgment under the federal rule, and the federal rule does not account for percentages of recovery in determining allowance entitlement status.

The state rule provides that a defendant can recover its costs, post-offer litigation expenses, attorneys’ fees and interest if the plaintiff recov­ers, exclusive of prejudgment interest and attorneys’ fees, 80 percent or less than the defendant’s unaccepted of­fer of judgment. In the alternative, the state rule states that the plaintiff can re­cover its costs post-offer litigation ex­penses, attorneys’ fees and interest, if it recovers, exclusive of prejudgment in­terest and attorneys’ fees, 120 percent or more of its unaccepted offer.

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