Most business owners assume that if they win a lawsuit, the other side pays their legal bills. In Florida, that assumption is usually wrong. Under the American Rule, each party pays its own attorney’s fees no matter who prevails, unless a contract or a statute says otherwise. That default quietly reshapes the economics of every dispute. A company can spend six figures defending a weak claim, win outright, and still absorb every dollar of its own defense. Florida’s proposal for settlement statute is one of the few tools that can change that result, and used well, it turns the cost of litigation back onto the party that refused a fair deal.
The Exception That Section 768.79 Creates
Section 768.79 of the Florida Statutes lets either side in a civil action for damages serve a formal settlement offer, known as a proposal for settlement or an offer of judgment. The statute applies to both contract and tort claims, so it reaches the disputes businesses see most often, from breach of contract and unpaid invoices to construction payment fights and business torts. The concept is straightforward. One party serves a written offer to resolve the case for a specific dollar amount. If the other side rejects it and then does meaningfully worse at trial, the rejecting party can be ordered to pay the offering party’s attorney’s fees and costs from the date the offer was served.
How the 25 Percent Threshold Works
The statute sets a clear numerical trigger. If a defendant serves a proposal and the plaintiff recovers nothing, or recovers a judgment at least 25 percent below the offer, the defendant is entitled to fees and costs incurred from the date of the offer. If a plaintiff serves a proposal and then wins a judgment at least 25 percent above the offer, the plaintiff is entitled to fees and costs from that date. The offer stays open for 30 days before it is treated as rejected.
Consider a contractor sued for $200,000 who believes the claim is worth far less. Early in the case, the contractor serves a proposal for $60,000. The plaintiff rejects it and takes the matter to trial, where the jury awards $40,000. Because the award is more than 25 percent below the offer, the contractor can recover the attorney’s fees it spent from the date of that proposal forward. The plaintiff still collects the $40,000, but the fee award can erase much of it, and in a lopsided case it can exceed the judgment entirely. That is the leverage the statute creates, and it is why a well-timed proposal changes how the other side values the case.
Why Timing and Strict Compliance Decide Whether It Works
That power comes with exacting requirements, and courts enforce them strictly. A proposal must be in writing, state that it is made under section 768.79, name the party making it and the party receiving it, state its total amount, and address any claim for punitive damages. Florida Rule of Civil Procedure 1.442 adds further detail and requires the proposal to be clear enough that the recipient can evaluate it without guessing. A proposal that is ambiguous, omits a required term, or fails to resolve how it treats multiple parties can be struck down, leaving the offering party with no fee recovery at all.
Two further limits matter. A court can deny fees if it finds the proposal was not made in good faith, which discourages token offers designed only to manufacture a fee claim. And because the statute reaches actions for damages, it does not fit cases that seek only injunctions, declarations, or other non-monetary relief. Timing counts as well. Fees run only from the date the proposal is served, so a reasonable early offer protects far more of your costs than one made on the eve of trial.
Conclusion
A proposal for settlement is one of the most effective financial tools in Florida litigation, but it rewards precision. A proposal served too late, drafted carelessly, or priced without a clear read of the case can fail at the moment it matters most. Because the rules are technical and the consequences cut both ways, it is worth having counsel evaluate the timing and structure of any proposal before it goes out. If you are weighing a business dispute and want to understand how a proposal for settlement could shift the cost of the case, our attorneys can help you assess your position and use the tool to your advantage.