Proposals for Settlement: Getting Attorneys Fees When You Otherwise Can’t Get Them

The American rule states that the winning party in a lawsuit doesn’t automatically get its attorneys fees just for being the winner. Rather, there must either be a contract providing for prevailing party attorneys fees or a statute that awards attorneys fees.

The Proposal for Settlement

But there is one other way to get attorneys fees in almost any kind of case. It’s called a proposal for settlement. It is a unique rule that can allow a party to get attorneys fees, even in the absence of a contract or statute. Of course, it can also lead to you being the one paying attorneys fees if you’re on the wrong end of the judgment.

The rule says that a party can make a settlement offer to the other side. If it’s accepted, the case is over and settled for whatever amount was offered. The other side gets 30 days to consider the offer and accept it or reject it (doing nothing is considered a rejection).

The Consequences of Rejection

If the party rejects the offer (or again, does nothing), and the case goes to trial, if the Plaintiff (the party that rejected the offer) wins the case, but wins 25% less than what was offered, the Plaintiff must pay the Defendant’s attorneys fees.

It works the other way as well. Let’s say that the Plaintiff makes an offer to settle, which the Defendant rejects. If the case goes to trial, and the Plaintiff wins 25% more than what they offered, the Defendant will have to pay the Plaintiff’s attorneys fees.

The Winner May be the Loser

This can put someone in the unique (and unenviable) position of winning a case but owing the other side money.

Imagine that a Defendant offers $100,000 to settle the case and the offer is rejected. Later, at trial, the Plaintiff wins $30,000 (which is far less than 25% off of the offered $100,000, or less than 75% of that offer).

The Plaintiff may win the $30,000, but he now owes the Defendant its attorneys fees. If the Defendant’s attorneys fees were, say, $50,000, the final judgment would actually be against the Plaintiff (for the difference of $20,000), even though the Plaintiff is technically the winner of the case.

Considering Proposals

This is why it is so important to discuss and consider proposals for settlement. Rejecting an offer is not just taking a risk that you will get nothing at trial if you push forward. The risk now is that you could owe money to the other side, dispute being the party that was wronged.

Plaintiffs can also use this statute to their advantage, as a way to convince Defendants to settle, and if they don’t, as a way of recovering attorneys fees where that would otherwise be impossible.

Need help in your commercial litigation case? We have strategies that could help you. Call the West Palm Beach commercial litigation lawyers at Pike & Lustig today.

Sources:

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

flcourts.gov/content/download/880895/file/AJS%202023%20Checklist%20for%20Validity%20of%20Proposals%20for%20Settlement%20Revised.pdf