What is a CCP § 998 Offer?

CCP § 998 takes its name from the code section from which the offer derives: the California Code of Civil Procedure (“CCP”) § 998. A CCP § 998 offer is a type of settlement offer that encourages the settlement of disputes prior to arbitration or a trial. The offer provides incentives to the party receiving it, encouraging them to accept it.

Incentives or Penalties

The main incentive offered by CCP § 998 is the idea that a penalty will be incurred if the party that refuses the offer fails to get a better verdict at trial. This can be a strong motivator to either party for settlement. Penalties include:

• Mandatory Penalties – The plaintiff will lose the right to recover court costs after the CCP § 998 offer has been made and must pay the defendant’s post-offer costs.
• Discretionary Penalties – The court or arbitrator can order the plaintiff to pay reasonable expert witness fees that the defendant incurred in connection with the trial or arbitration post-offer.

Often a CCP § 998 offer is made to plaintiff. However, these offers can also be made to the defendant. If a defendant does not accept a CCP § 998 offer and the plaintiff obtains a favorable judgment, the defendant will be required to pay reasonable post-offer expert witness fees incurred by Plaintiff and is still required to pay the plaintiff’s costs and possibly their attorneys’ fees.

The purpose of a CCP § 998 offer is not to cause further financial hardship to one party. Rather, it is designed to force settlement by breaking settlement impasses. Many times, the initial offer is either too high or too low, causing an impasse. An unrealistic offer is likely to be beaten at trial or arbitration, but refusing a reasonable offer leads to the risk of incurring further penalties and costs. The risk of penalties can cause both sides to be more willing to negotiate and accept reasonable offers.

Evaluating a CCP § 998 Offer

When choosing whether or not to accept a CCP § 998 offer, it is important to consider whether the final judgment or award is likely to be “more favorable” than the offer. If so, the offer should be rejected and the case should be taken to trial or arbitration. When determining if the final judgment or award will be “more favorable” or not, you must consider both the damages estimate and the pre-offer costs. Costs include a range of items, including attorney’s fees, which must be carefully reviewed. A list of costs to consider is available under CCP § 1033.5.

When making an offer, it must be realistic. Evaluate the other party’s chances at trial or arbitration. If it seems likely that the offer is reasonable, consider the amount and see if it matches your expectations. Also factor in reasonable costs and attorney’s fees. If the offer is well-formed but still rejected, there is a good chance that the award obtained may be less favorable than the CCP § 998 offer. This will benefit the defendant in the end and can cost you money.

Should I Consider a CCP § 998 Offer?

CCP § 998 offers are a great tool for resolving a case before it goes to trial. However, for it to work, the offer amount must be well-researched and realistic. If you wish to avoid trial or arbitration in your personal injury case, consider discussing a CCP § 998 offer with your attorney. If the defendant makes a CCP § 998 offer, your attorney should evaluate it fully, factoring in a number of important elements. Evaluating a CCP § 998 offer is not something you should do without the help of an experienced personal injury attorney. CCP § 998 offers are complicated. Without the proper training and experience, you could make a costly mistake. When facing a personal injury case, be sure to turn to an experienced personal injury attorney to ensure you are fairly represented and compensated.