What is a 998 Offer to Compromise?
Updated: Sep 6, 2020
A 998 Offer to Compromise ("998 Offer") allows a party to a lawsuit to shift costs to the other party. This offer is based on California Code of Civil Procedure § 998. A 998 Offer is generally good for only 30 days, unless otherwise agreed upon by the parties.
You make a 998 Offer by using the required statutory language under the code, CCP § 998, and related case law.
Here’s how it works from the Plaintiff's side:
Plaintiff sends Defendant a $50,000 998 Offer on September 1.
Defendant doesn’t accept the offer by October 1 (30 days later). Therefore, the 998 Offer is now closed.
Plaintiff prepares for trial and spends $15,000 in costs preparing for trial.
Plaintiff goes to trial and wins. The jury awards Plaintiff $55,000.
Plaintiff has essentially “beat” the original 998 Offer for $50,000. Therefore, Plaintiff should be able to recover some of the $15,000 in costs he/she incurred preparing for trial.
If, however, Defendant accepted the $50,000 998 Offer on or before October 1, then the case would have settled and would be over.
As always, a 998 Offer can become complicated if, for example, there a multiple parties, extensions, issues of whether the 998 Offer was made in "good faith", etc.
In the end, what's important to know is that a 998 Offer is a type of settlement offer but one with teeth because a 998 Offer allows a party to shift costs to the other party.
If you have any questions or concerns, please do not hesitate to contact us.