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Michigan's offer-of-judgment rule

The Michigan Medical Malpractice blogger (Mar. 4) says the operation of this variation on loser-pays hasn't proved favorable to defendants in practice: "The sanctions under both rules are, in reality, a one-way penalty. They are covered by and paid by liability insurance when assessed against the defendant, so they represent an additional risk for the insurer. If they are assessed against the plaintiff, though, there is usually no effective way to enforce them. The costs are assessed against the losing party, not against his attorney. Most plaintiffs are financially unable to pay the assessments, and a vigorous effort to collect on the part of a victorious defendant usually ends in the bankruptcy courts."

The uncollectability of an award of costs is an obvious possibility when a case ends in an outright defense verdict, although it has been reported in Britain that the costs issue still is helpful to defendants in persuading a plaintiff who loses at trial to abandon a weak case at that stage rather than (as often happens in this country) demanding a settlement in lieu of appeal. On the other hand, it would be surprising if the offer-of-settlement rule does not assist a defendant in cases which result in a verdict for plaintiffs at a lower amount than had been offered. I would assume that the fee award to which the defendant is entitled is subtracted as an offset from the check it must write at the end of the case, thus sidestepping any problems of collectability. Perhaps someone familiar with Michigan procedure can confirm whether or not that is the practice.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.