If you lose at trial for your auto accident claim, there is a possibility that you will have to pay the opponents costs. This is especially true if the other party gives you an “offer to compromise” agreement. An offer to compromise agreement is available in most states, and is usually a statutory right. An offer to compromise agreement is a settlement offer, which if refused, binds the party to pay the court costs of the opposing party if they receive a lower judgment than the amount offered at trial. This statutory offer is often used strategically by parties who want to settle the case out of court. If a reasonable offer is made, this puts pressure on the receiving party to either accept the settlement offer or risk losing.
Submitting an Offer to Compromise
An offer to compromise may be submitted by either a plaintiff or a defendant, it must usually be in writing, and it must offer something of value in exchange to settle the case. This can be an offer of money, an offer to pay costs so far incurred, or anything else of value to the parties. If the party who receives the offer to compromise decides not to accept, they run the risk of receiving a lower verdict than the offer amount at trial. If they receive a lower verdict, or lose the lawsuit all together, they must pay their own costs, as well as the other party’s costs. This means that even if the party who refuses the offer to compromise wins the lawsuit, they may still have to pay the other party's costs.
For example, if the party who made the offer to compromise has court costs that outweigh the amount awarded to the party who refused the offer to compromise, the court will enter a judgment in favor of the party who made the offer for the remainder of the costs. Court costs can include any costs required by state or federal statute, as well as expert witness costs post-offer. The court also has the discretion to award the party who made the offer pre-offer costs, as well as interest on these pre-offer costs. There are no formulas to determine damages in a personal injury case. What's fair is based on what one could expect a reasonable jury to award and then factor in the costs and risks of suit.
Getting Help
The best thing to do when faced with an offer to compromise is identify the risks in your lawsuit, and talk them over with your attorney. Remember that settling your case outside of court will also save you additional time and money, and you should take this into account when determining if the party’s offer is reasonable. If you and your attorney determine that the offer is reasonable in light of all additional costs and risks, then you should accept the offer to prevent any future financial loss.