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Offers of Judgment, Court Costs & Fees

Courts almost universally favor litigants reaching a settlement rather than thrusting a decision on them. To further this objective, several rules exist which encourage settlement. One such rule is the offer of judgment rule in Missouri Supreme Court Rule 77.04. In the context of litigation, fees usually refers to attorney fees and costs refer to the other expenses of litigation, like a court filing cost, service of process cost, deposition costs, etc.

The offer of judgment rule tinkers with the award of costs. Specifically, a party may send a formal offer of settlement to an opposing party which is to be accepted within a certain period of time. If the opposing party rejects the offer, and then subsequently fails “to obtain a judgment more favorable than that offered, that party shall not recover costs […] from the time of the offer but shall pay costs from that time.” Rule 77.04 not only serves as a mechanism to encourage settlement, but also as a strategic tool in litigation. Are you really that confident in your case to where you risk paying us our costs at the end?

The next obvious question is what falls within the definition of “costs”? A “cost” is, in its broadest sense, a pecuniary allowance, made to the successful party made for the expense in prosecuting or defending an action. In the Interest of J.P., 947 S.W.2d 442 (Mo. Ct. App. 1997). Missouri statutes further list some items that may be included as costs: deposition expenses, court reporter fees, cost of witnesses, juror fees, and fees for sheriffs. As a practical matter, the two biggest costs in cases tend to be deposition expenses and witness fees. Therefore, in larger cases where several depositions need to be taken and several witnesses are required, an award of costs can  be large, even to the point of swaying a party’s decision whether to proceed to trial or settle.

An award of costs is not something which immediately comes to mind when a party is pursuing or fending off a lawsuit. However, it is important to have counsel who can adequately advise you of how it impacts a given case. Contact us with questions.