The New Jersey offer of judgment: 120% and 80%, with fees and 8% interest

New Jersey's offer of judgment rule is a percentage-band rule, and the two numbers are the whole thing. A claimant whose offer is rejected and who then recovers 120% of it or more collects reasonable litigation expenses, a counsel fee and 8% prejudgment interest. A defendant whose offer is rejected and whose opponent then recovers 80% of it or less collects the same allowances.

The rule applies only to money. It has an express hardship escape. And a 2022 restructuring built out an elaborate scheme for multi-defendant cases that decides who pays what when only some defendants respond.

Making an offer

R. 4:58-1(a):

Except in a matrimonial action or an action adjudicated in the Special Civil Part, any party may, at any time more than 20 days before the actual trial date, serve on any adverse party, without prejudice, and file with the court, an offer to take a monetary judgment in the offeror's favor, or as the case may be, to allow judgment to be taken against the offeror, for a sum stated therein (including costs). The offer shall not be effective unless, at the time the offer is extended, the relief sought by the parties in the case is exclusively monetary in nature. Any offer made under this rule shall not be withdrawn except as provided herein.

Four gates. Not a matrimonial action, not the Special Civil Part, more than 20 days before the actual trial date, and the relief sought must be exclusively monetary. A case with a live injunctive claim is outside the rule, and the test is applied "at the time the offer is extended."

Note also that the offer is both served and filed, and the stated sum includes costs.

Acceptance, withdrawal, and the two expiry dates

R. 4:58-1(b) runs two clocks at once:

If at any time on or prior to the 10th day before the actual trial date the offer is accepted, the offeree shall serve on the offeror and file a notice of acceptance with the court. The making of a further offer shall constitute a withdrawal of all previous offers made by that party. An offer shall not, however, be deemed withdrawn upon the making of a counter-offer by an adverse party but shall remain open until accepted or withdrawn as is herein provided. If the offer is not accepted on or prior to the 10th day before the actual trial date or within 90 days of its service, whichever period first expires, it shall be deemed withdrawn and evidence thereof shall not be admissible except in a proceeding after the trial to fix costs, interest, and attorney's fee. The fact that an offer is not accepted does not preclude a further offer within the time herein prescribed.

Two expiry dates, and the earlier one governs: the 10th day before trial, or 90 days from service. An offer served early in a case that does not reach trial for a year has already expired.

Two more mechanics worth marking. A further offer by the same party withdraws its earlier offers — so, as in Michigan, only your latest offer is live. But a counteroffer by the other side does not withdraw your offer; it stays open.

R. 4:58-1(c) allows voluntary withdrawal before acceptance, with a consequence: "An offer voluntarily withdrawn by the offeror shall not be subject to this Rule." Withdraw it and you cannot later rely on it for allowances.

The claimant's 120%

R. 4:58-2(a):

In cases other than actions against an automobile insurance carrier for uninsured motorist/underinsured motorist benefits, if the offer of a claimant is not accepted and the claimant obtains a money judgment, in an amount that is 120% of the offer or more, excluding allowable prejudgment interest and counsel fees, the claimant shall be allowed, in addition to costs of suit: (1) all reasonable litigation expenses incurred following non-acceptance; (2) prejudgment interest of eight percent on the amount of any money recovery from the date of the offer or the date of completion of discovery, whichever is later, but only to the extent that such prejudgment interest exceeds the interest prescribed by R. 4:42-11(b), which also shall be allowable; and (3) a reasonable attorney's fee for such subsequent services as are compelled by the non-acceptance.

Three allowances, on top of costs of suit. Two details decide how much they are worth.

The comparison excludes prejudgment interest and counsel fees — so the 120% is measured against the bare recovery.

The 8% interest runs from the offer or the completion of discovery, whichever is later, and only to the extent it exceeds the ordinary R. 4:42-11(b) rate. It is a top-up, not a replacement.

Subsection (b) applies the same structure to UM/UIM claims against an automobile carrier, with the comparison made against a verdict "adjusted to reflect comparative negligence, if any."

The defendant's 80%

R. 4:58-3(a)–(b):

If the offer of a party other than the claimant is not accepted, and the claimant obtains a judgment ... that is favorable to the offeror as defined by this rule, the offeror shall be allowed, in addition to costs of suit, the allowances as prescribed by R. 4:58-2.

(b) A favorable determination qualifying for allowances under this rule is a judgment or in the case of a claim for uninsured/underinsured motorist benefits, a verdict (molded to reflect comparative negligence, if any) in an amount, excluding allowable prejudgment interest and counsel fees, that is 80% of the offer or less.

Same allowances, mirrored band.

Five ways a defendant's allowance is refused

R. 4:58-3(c) is the subsection defendants most often lose on:

No allowances shall be granted if (1) the claimant's claim is dismissed, (2) a no-cause verdict is returned, (3) only nominal damages are awarded, (4) a fee allowance would conflict with the policies underlying a fee-shifting statute or rule of court, or (5) an allowance would impose undue hardship or otherwise result in unfairness to the offeree. If, however, undue hardship can be eliminated by reducing the allowance to a lower sum, the court shall reduce the amount of the allowance accordingly. The burden is on the offeree to establish the offeree's claim of undue hardship or lack of fairness.

The first three are counter-intuitive: a defendant who wins outright — dismissal, no cause, or nominal damages — gets nothing under this rule. The allowances are for beating an offer, not for winning.

Item (4) matters in employment and consumer cases, where a statutory fee-shifting scheme may make an offer-of-judgment fee award inconsistent with the statute's policy.

The hardship escape in (5) also appears in R. 4:58-2(c) for claimant-side allowances, in the same terms, with the burden on the offeree and a duty on the court to reduce rather than refuse where reduction would cure the hardship.

Multiple parties

R. 4:58-4 is the longest part of the rule and exists because global offers in multi-defendant cases used to produce arguments about who owed what.

For claimants, R. 4:58-4(a): "If a party joins as plaintiff for the purpose of asserting a per quod claim or if one or more plaintiffs seek a claim that is derivative of the claim of another plaintiff, the claimants may make a single unallocated offer. Otherwise, multiple claimants may file and serve any offer individually."

For defendants, R. 4:58-4(b)(1) lets a claimant make a global offer, and then allocates the consequences by how the defendants responded:

(A) No Response. When there is a rejection of, or no response to, plaintiff's global offer, each defendant will be jointly and severally responsible for the entire allocation set forth pursuant to R. 4:58.

(B) Global Counteroffer. When there is a global counteroffer from defendants and plaintiff obtains a favorable determination qualifying for allowances under this rule, each defendant will be responsible for the portion of expenses and fees equal to the percentage for which such defendant was individually adjudicated responsible. ...

(C) Counteroffer to Claimant's Global Offer by One Defendant. When a single defendant makes a counteroffer to a global offer, it shall be treated as a counteroffer limited to that defendant's share. (i) If that defendant's final adjudicated share is less than 120% of their individual counteroffer, that defendant shall not be assessed any allowances under the rule and the remaining non-responsive defendants will remain jointly and severally responsible for the total allowances under the rule.

The through-line is simple even though the text is not: a defendant that responds individually limits its exposure to its own share; a defendant that stays silent stays jointly and severally liable for the whole allowance. That is the practical lesson of subparagraphs (A) through (E).

R. 4:58-4(b)(3) preserves the alternative: individual offers may still be made under R. 4:58-1.

And R. 4:58-4(c) requires completeness: "If a claimant asserts multiple claims for relief or if a counterclaim has been asserted against the claimant, the claimant's offer shall include all claims made by or against that claimant."

Retrials, and claiming the allowance

R. 4:58-5 keeps an offer alive through a retrial:

If an action is required to be retried, a party who made a rejected offer of judgment in the original trial may, within 10 days after the fixing of the first date for the retrial, serve the actual notice on the offeree that the offer then made is renewed and, if the offeror prevails, the renewed offer will be effective as of the date of the original offer. If the offeror elects not to so renew the original offer, a new offer may be made under this rule, which will be effective as of the date of the new offer.

Renewing preserves the original date — which, given that interest runs from the offer, is usually worth far more than a fresh offer. Ten days from the fixing of the retrial date.

R. 4:58-6 sets the deadline and closes a double-recovery loophole:

Applications for allowances pursuant to R. 4:58 shall be made in accordance with the provisions of R. 4:42-9(b) within 20 days after entry of final judgment. A party who is awarded counsel fees, costs, or interest as a prevailing party pursuant to a fee-shifting statute, rule of court, contractual provision, or decisional law shall not be allowed to recover duplicative fees, costs, or interest under this rule.

Twenty days, and no stacking on top of another fee-shifting entitlement.

How New Jersey compares to the federal rules

The federal rule shifts costs. This one shifts fees and adds interest — and, in a case with several defendants, decides which of them carries the bill.

A short checklist

• Check the case type first. Non-monetary relief anywhere in the case defeats the offer.
• Count 20 days before the actual trial date, and remember the 90-day expiry from service.
• Serve and file. Both are required.
• Do not make a second offer casually — it withdraws your first. A counteroffer from the other side does not.
• Think before withdrawing. A voluntarily withdrawn offer is outside the rule entirely.
• Measure the band on the bare recovery, excluding prejudgment interest and counsel fees.
• As a defendant, respond to a global offer. Silence keeps you jointly and severally liable for the whole allowance.
• As a defendant, remember you get nothing for a dismissal, a no-cause or nominal damages.
• Check for a fee-shifting statute before assuming a fee allowance is available.
• On a retrial, renew within 10 days to keep the original offer date.
• Apply within 20 days of final judgment, under R. 4:42-9(b).

Where these rules live

• R. 4:42-9 — Attorney's Fees
• R. 4:42-11 — Interest; Rate on Judgments
• R. 4:58-1 — Offer of Judgment; Time and Manner
• R. 4:58-2 — Consequences of Non-Acceptance of Claimant's Offer
• R. 4:58-3 — Consequences of Non-Acceptance of Offer of Party Other Than Claimant
• R. 4:58-4 — Multiple Claimants and Multiple Defendants
• R. 4:58-5 — Retrial
• R. 4:58-6 — Application for Allowances

This page explains what the rule says; it is not legal advice. Whether a fee allowance would conflict with a particular fee-shifting statute under R. 4:58-3(c)(4) is a question decided case by case.