It's not a catch on making settlement offers; it's a catch on refusing to accept a settlement offer, and then failing to match or beat the offer at trial. The

It's not a catch on making settlement offers; it's a catch on refusing to accept a settlement offer, and then failing to match or beat the offer at trial. The rationale is, you could have had a better deal if you'd accepted the other side's settlement offer, but you dragged the other side through a trial, so you have to pay their court costs. This is also seen in Rule 68 of the Federal Rules of Civil Procedure. Some states have similar rules but also provide for attorneys' fees. See the annotations at http://www.commondraft.org/#SettlementIncentiveClause http://www.commondraft.org/#SettlementIncentiveClause (self-cite).