Sometimes referred to as a CCP offer or an offer to compromise, a 998 offer is a formal settlement proposal that’s made before a civil trial or arbitration. Settlement offers in civil suits are common, so what makes the 998 offer special is that if it’s rejected, the rejecting party may face financial consequences if they fail to achieve results that are better than what was offered to them before trial. This offer gets its name from Section 998 of the California Code of Civil Procedure, which outlines its requirements.
Why Do 998 Offers Exist?
One reason 998 offers exist is to encourage parties to resolve cases without trial through the use of reasonable settlement offers. In other words, California courts don’t want one side to stubbornly refuse a reasonable settlement offer where the outcome is fairly predictable, resulting in a waste of the court’s time and the other side’s money.
When Do Parties Make a 998 Offer?
A 998 offer exists in most civil cases, such as personal injury and employment law. Any party to the lawsuit may submit a 998 offer as long as the below conditions are met:
- The offer is in writing.
- The offer is made at least 10 days before trial or arbitration.
- The offer is clearly stated, including its terms and conditions.
- The offer provides a method in which the accepting party can indicate acceptance through the signing of a statement of acceptance, like a copy of form CIV-090.
- The offer is made in good faith, with terms and conditions that are reasonable given the facts of the case and state of litigation.
After receiving a 998 offer, the recipient has 30 days or the beginning of trial or arbitration (whichever occurs first) to accept the offer. Not responding to the offer constitutes a rejection.
What Happens If a 998 Offer Gets Rejected?
The consequences depend on who makes the offer and the outcome at trial.
The Plaintiff Makes a 998 Offer
If the defendant rejects the plaintiff’s 998 offer, and then fails to achieve a result from trial that’s better than what was submitted by the plaintiff’s 998 offer, then the court has the discretion to force the defendant to pay for some of the plaintiff’s litigation costs that were incurred after making the 998 offer.
The Defendant Makes a 998 Offer
If the plaintiff rejects the defendant’s 998 offer, and then fails to achieve a result from trial that’s better than what was submitted by the defendant’s 998 offer, then one of two things can potentially happen:
- The plaintiff is barred from recovering any of their litigation costs from the defendant that the plaintiff incurred from the time the defendant made their 998 offer. The plaintiff must also pay the defendant’s litigation costs from the time of the 998 offer. The court also has the discretion to force the plaintiff to pay for reasonable expert witnesses costs.
- Any damage award the plaintiff receives will be reduced by the defendant’s costs incurred from the time the defendant made the 998 offer. If the defendant’s costs are higher than the plaintiff’s damage award, then the court will enter a judgment in the defendant’s favor for the difference in amount.
Why Do Litigants Often Settle Cases Before Trial?
Even without the risk of owing more money by rejecting a 998 offer, most civil suits in California (and the rest of the United States) settle without going to trial. There are several reasons for this.
- Risk aversion: Either side may feel they have a strong case, but don’t want to risk losing at trial, whether it’s for financial reasons, publicity reasons, or both.
- Litigation costs: Litigating a case, even without a trial, can be expensive, both from a financial and time perspective. The sooner the case settles, the sooner either side can stop spending money on court fees, expert witnesses, and their attorneys.
- Control: By settling a case, a litigant can partially control the outcome. For example, maybe a defendant has to pay the plaintiff one way or another, but by settling, the defendant can negotiate a slightly smaller amount owed and more time to pay that amount.
- Privacy: Trials and court documents are often open to the public, so settling makes it far easier to keep details about the case (and the outcome of the case) confidential.
- Protecting relationships: Litigants might have a legal disagreement, but wish to stay business partners. Avoiding trial makes it easier to preserve these relationships.
Talk to a California Personal Injury Attorney
Whether you’re already in a civil suit, or you’re thinking about starting one, there are a lot of things to consider, including when and how to settle a case. You don’t have to have an attorney represent you in a lawsuit, but having one is usually a good idea. To find out more about 998 offers and how to best reach a settlement, contact Maison Law today. Our litigators have years of experience negotiating cases, whether it’s with an insurance claim adjuster or defense counsel in a pending lawsuit.
