What happens if a settlement offer is not accepted, and the resulting judgment is significantly less than the offer?

When a settlement offer is made in a civil case and is not accepted, if the eventual judgment obtained by the plaintiff is significantly less than the offered amount, the defendant may be entitled to recover costs incurred after the settlement offer was made. This principle is rooted in the idea of encouraging settlement negotiations and discouraging parties from turning down reasonable offers.

In many jurisdictions, including Louisiana, the rules governing costs provide that a party may recover costs incurred after rejecting a valid offer of judgment if the final judgment is less favorable. This serves to incentivize parties to consider settlement offers seriously, as they could be held liable for additional costs if they decline reasonable offers and do not achieve a better result at trial.

By contrast, automatic win for the plaintiff would not occur simply based on a settlement offer, and a judge would not dismiss the case solely because a settlement offer was not accepted. Additionally, financial implications do exist when offers are made and rejected; thus, it is not accurate to claim that there would be no financial implications in such cases. The recovery of costs is fundamentally tied to the outcome and decisions made around settlement offers.