How Does a California Code of Civil Procedure 998 Work?
Please be advised that the following topic is for informational purposes only and not a legal matter currently handled by our firm. If you need further assistance regarding this particular topic, you can contact your local Bar Association for a referral to an attorney who may be able to address your inquiry in more detail.
Navigating a personal injury lawsuit can feel like a high-stakes game of strategy. One of the most powerful, and often misunderstood, strategic tools in California litigation is the Code of Civil Procedure (CCP) § 998 Offer to Compromise.
While most lawsuits involve each party paying their own legal fees, a “998 offer” can dramatically change the game by shifting significant costs from one party to another. It’s a formal proposal to settle a case for a specific amount, designed to encourage reasonable settlements and penalize parties who refuse to accept a fair offer before trial.
This guide will break down exactly what a 998 offer is, how it works, the potential risks and rewards, and the critical rules you must follow. Understanding this process is essential for anyone involved in a California personal injury claim.
What is a CCP § 998 Offer to Compromise? The Basics
A CCP § 998 Offer to Compromise, commonly called a “998 offer” or “statutory offer to compromise,” is a formal, written settlement proposal made by either a plaintiff or a defendant in a lawsuit. You can read the full text of the law on the official California Legislative Information website.
Its primary purpose is to provide a strong financial incentive for the receiving party to settle the case before it reaches a costly trial or arbitration. It essentially tells the other side: “Here is a reasonable offer to resolve this case now. If you reject it and fail to achieve a better result at trial, you may be forced to pay some of my legal costs.”
This cost-shifting mechanism makes it a potent tool for leverage. It forces both sides to seriously re-evaluate the strengths and weaknesses of their case and the true cost of litigation.
How a 998 Offer Works: A Step-by-Step Guide
The 998 process follows a strict set of rules. Missing a step or deadline can invalidate the entire offer. Here’s how it typically unfolds.
Step 1: The Offer is Made
An offer can be made at any point after litigation has formally begun, but it must be served at least 10 days before the start of the trial or arbitration. The offer must:
- Be in writing.
- Explicitly state that it is being made pursuant to California Code of Civil Procedure § 998.
- Include all the terms and conditions of the proposed judgment or award.
- Provide a space for the receiving party to sign and accept the offer.
Step 2: The Offer is Received and Evaluated
The party who receives the 998 offer has a critical decision to make. They have 30 days (or until the start of trial, whichever comes first) to respond. If they do nothing, the offer is automatically considered rejected and withdrawn after this period.
Step 3: Acceptance, Rejection, or Revocation
- Acceptance:If the party accepts the offer, they must do so in writing. The case is then effectively over, and the court will enter a judgment according to the terms of the offer, which will be reflected in your case results.
- Rejection:The party can formally reject the offer or, as mentioned, simply let it expire. The case then proceeds toward trial. This is where the financial penalties come into play.
- Revocation:The party who made the offer can revoke it in writing at any time before it’s accepted.
The Financial Risks & Penalties of Rejecting a 998 Offer
This is the core of the 998 offer’s power. The consequences of rejection depend on which party made the offer and how the trial verdict compares to that offer.
If a Plaintiff Rejects a Defendant’s 998 Offer
Imagine the defendant offers the plaintiff $150,000 to settle. The plaintiff rejects it, believing they can win more at trial.
- Scenario A: Plaintiff Wins More. The plaintiff wins a judgment of $200,000 at trial. Because this is “more favorable” than the $150,000 offer, the 998 offer has no effect.
- Scenario B: Plaintiff Wins Less. The plaintiff wins a judgment of only $120,000 at trial. Because this is not more favorable than the $150,000 offer, the plaintiff faces serious penalties. The court may order the plaintiff to pay for the defendant’s legal costs incurred from the date of the offer forward, including potentially expensive expert witness fees.
If a Defendant Rejects a Plaintiff’s 998 Offer
Now, imagine the plaintiff offers to settle for $250,000. The defendant rejects it, thinking the plaintiff’s case is weak.
- Scenario A: Defendant Wins (or Plaintiff Wins Less). The plaintiff wins a judgment of $200,000 at trial. Because this is less than the plaintiff’s $250,000 offer, the 998 offer has no negative consequence for the defendant.
- Scenario B: Plaintiff Wins More.The plaintiff wins a judgment of $300,000 at trial. Because this is more favorable than their $250,000 offer, the defendant is penalized. The court may order the defendant to pay the plaintiff’s post-offer costs and, crucially,prejudgment interest at a rate of 10% on the entire judgment.
The “Good Faith and Reasonableness” Requirement
A 998 offer is not a blank check to engage in gamesmanship. California courts require that any 998 offer be made in good faith.This means the offer must be “realistically reasonable under the circumstances.”
A defendant cannot make a token $1 offer on a case with clear liability and significant personal injury damages just to trigger the cost-shifting penalties. The court will look at what information was available to both sides when the offer was made to determine if it was a legitimate attempt at settlement.
Demonstrating Success: A Case in Point
Understanding the strategic value of a CCP § 998 offer is key to maximizing a client’s recovery. The difference between an initial offer from an insurance company and the final result often comes down to an attorney’s ability to apply pressure and prove the full value of a claim—a situation where a timely 998 offer can be decisive.
A real-world case from our files highlights this perfectly. A man suffered serious injuries in a motorcycle accident and was facing significant medical bills. The insurance company’s initial settlement offer was just $300,000, an amount that would have left him with very little compensation after his expenses were paid.
Recognizing this lowball offer, our team went to work. Through aggressive negotiation and by strategically preparing the case for trial, we demonstrated the true, much higher value of his claim. This relentless advocacy forced the insurance company to completely re-evaluate their position.
Ultimately, we increased the settlement offer to $550,000 and negotiated to significantly reduce his medical bills. This strategic approach meant the client put over $280,000 directly in his pocket—a result that would have been impossible without fighting back against the initial, inadequate offer. This is the kind of tangible difference expert legal strategy makes.
What Our Clients Say
Trust and expertise are paramount in personal injury law. Here’s what some of our clients have said about their experience with our firm.
Note to Client: Please insert 1-3 relevant client testimonials here. For example:
“My sister got in a car accident, was hit badly by another driver, became unconscious, and was immediately taken to hospital emergency with an internal brain bleeding thus could not defend herself. As a result, the police report had false information from the other driver and concluded my sister at fault. While other legal firms purposed disappeared after seeing at the police report and other driver’s cheap insurance policy (not easy win), Sally Morin team with great heart and “no win, no pay” written clause took on the case and successfully reversed both insurance + police reports and won the case. My family is grateful to find Sally Morin firm and great team with legal expertise, experience, and most important great heart. Thank you very much.” James Minh
Read James Minh N.‘s review of Sally Morin Personal Injury Lawyers on Yelp
Frequently Asked Questions (FAQ) about California 998 Offers
How to Choose the Right Attorney for Your Case
As this guide illustrates, the strategic use of a CCP § 998 offer can dramatically impact the outcome of a personal injury case. However, understanding the rules is only half the battle; the success of such a powerful legal tool rests squarely on the experience and strategic foresight of your attorney.
Making the right choice in legal representation is, therefore, the single most critical decision you will make. To help you navigate this process and select a lawyer with the necessary skills, please use the guide below.
How to Choose the Right Lawyer for You
Don’t Navigate a 998 Offer Alone</h2>
A California 998 Offer to Compromise is a formidable legal instrument. Whether making, accepting, or rejecting an offer, the decision carries significant financial consequences that require the guidance of a legal expert.
Handling this process without an experienced personal injury attorney is a major risk. Now that you know what to look for in a legal partner, take the next step.
Contact Sally Morin Personal Injury Lawyers today for a free consultation to discuss your case and learn how our strategic approach can make all the difference.
