LITIGATION ALERT: OFFER OF SETTLEMENT IN TEXAS vs. OFFER OF JUDGMENT IN FEDERAL COURT

In 2003, the Texas legislature enacted an "Offer of Settlement" rule to encourage litigants to accept reasonable settlement offers by invoking a form of "fee shifting" or "loser pay" system.  The Offer of Settlement rule is codified in Rule 167 of the Texas Rules of Civil Procedure.  The Texas rule is modeled after the "Offer of Judgment" rule in the Federal Rules of Civil Procedure.  Both rules were designed to discourage frivolous and unnecessarily prolonged litigation.  However, there are material and substantial differences between the two rules, and the Texas rule is rarely used as a result.

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