PERSONAL INJURY | 2026-09-30

The Section 998 Offer: California’s Most Powerful Settlement Tool

A statutory offer to compromise can flip who pays costs — and, for plaintiffs, add expert fees and prejudgment interest — when the other side rejects a reasonable offer and then does worse at trial.

California gives litigants a powerful incentive to settle reasonably: the statutory offer to compromise under Code of Civil Procedure § 998. A well-crafted 998 offer changes the economics of a case. If a party rejects the offer and then fails to obtain a mor

Section 998 turns a rejected settlement offer into a financial risk for the party who rejected it.

What a Section 998 Offer Is

A § 998 offer is a statutory offer to compromise — a formal written offer, served under the statute, allowing a defined period for acceptance. If accepted, it resolves the case on the offered terms. If not accepted within the statutory period, it is deemed withdrawn — but it sets up powerful consequences if the rejecting party does not do better at trial than the offer.

The Core Consequence: Cost-Shifting

The heart of § 998 is cost-shifting based on whether the rejecting party beat the offer:

If a plaintiff rejects a defendant’s 998 offer and then fails to obtain a more favorable judgment, the plaintiff generally cannot recover its post-offer costs and must pay the defendant’s post-offer costs.
If a defendant rejects a plaintiff’s 998 offer and the plaintiff then obtains a judgment more favorable than the offer, the defendant faces the plaintiff’s post-offer costs and additional exposure described below.

This reversal of the usual cost rules creates real pressure to evaluate offers seriously.

Expert Witness Fees

Ordinarily, a party bears its own expert witness fees. Section 998 changes that: when a party rejects a valid 998 offer and fails to obtain a more favorable result, the court has discretion to require that party to pay the offeror’s reasonable expert witness fees incurred after the offer. In modern litigation, expert fees can be enormous, so this consequence can add substantially to the rejecting party’s exposure.

Prejudgment Interest for Plaintiffs — Civil Code § 3291

For personal-injury plaintiffs, § 998 has an additional edge. Under Civil Code § 3291, when a plaintiff makes a 998 offer that the defendant rejects, and the plaintiff then obtains a judgment more favorable than the offer, the plaintiff is entitled to prejudgment interest on the damages, calculated from the date of the offer. This interest — accruing on the entire damages award from the date of the offer to entry of judgment — can be a significant sum, and it is a powerful reason for plaintiffs to make early, reasonable 998 offers.

The Offer Must Be Valid, Reasonable, and in Good Faith

The consequences of § 998 attach only to a valid offer. Courts require that the offer be:

Made in good faith and reasonable under the circumstances — an offer that is a token or a mere litigation tactic, with no realistic prospect of acceptance, may not trigger the cost-shifting consequences;
Sufficiently certain in its terms, so that the offeree can evaluate it and, if accepted, a judgment can be entered; and
Properly served and compliant with the statute’s formal requirements.

An offer that is unreasonable, ambiguous, or non-compliant risks being denied effect — so careful drafting is essential.

Strategic Use

Because a 998 offer shifts risk onto the party that rejects it, timing and amount are strategic. A plaintiff who makes an early, reasonable offer that the defendant rejects positions itself to recover expert fees and prejudgment interest if it prevails. A defendant who makes a reasonable offer protects itself against post-offer costs if the plaintiff overreaches at trial. In both cases, the offer must be pitched at a level the maker can realistically beat (or that the offeree realistically should accept) to carry its full force.

Why It Matters

Section 998 is often the single most consequential procedural tool in California civil litigation. For plaintiffs, it can add expert fees and prejudgment interest to a favorable verdict; for defendants, it can shift substantial costs onto a plaintiff who rejects a fair offer. Either way, evaluating a 998 offer carefully — and making one strategically — can change the outcome and value of a case.

Frequently Asked Questions

What is a § 998 offer?

A statutory offer to compromise that, if rejected, triggers cost-shifting consequences when the rejecting party fails to obtain a more favorable result at trial.

What happens if I reject one and do worse at trial?

You generally lose your post-offer costs and may have to pay the offeror’s post-offer costs, and potentially the offeror’s expert witness fees.

What are the extra consequences for defendants?

If a defendant rejects a plaintiff’s valid 998 offer and the plaintiff beats it, the plaintiff can recover prejudgment interest under Civil Code § 3291 (in personal-injury cases) plus costs and possible expert fees.

Does the offer have to be reasonable?

Yes — it must be made in good faith and be reasonable; a token offer with no realistic chance of acceptance may not trigger the consequences.

When should a plaintiff make one?

Often early and at a reasonable amount, to start prejudgment interest running and set up cost and expert-fee recovery if the case goes well.

Can a bad offer backfire?

An invalid, ambiguous, or unreasonable offer may be denied effect, so careful drafting is important.

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Talk to a California Personal Injury Attorney

A well-timed § 998 offer can add expert fees and interest to your recovery — or protect you from costs. Trembach Law Firm uses this tool strategically. Call (818) 514-7680.

Contact Trembach Law Firm at (818) 514-7680 for a confidential consultation.

Trembach Law Firm | 27001 Agoura Road, Suite 350, Calabasas, CA 91301