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Plaintiffs in Colorado hope a new state law will allow them to recover litigation costs when they win damages at trial after rejecting a higher settlement offer. The new law, which becomes effective on July 1, is aimed at reversing the effect of a 1990 statute preventing plaintiffs from recouping the costs of litigation when they reject a defendant’s earlier settlement offer but win a smaller amount at trial. The law allows a plaintiff to recover litigation costs, such as depositions and expert witness fees, after obtaining a monetary judgment for less than the value of a defendant’s rejected settlement offer. Peter G. Koclanes, an attorney who represented the Colorado Trial Lawyers Association, which lobbied for the bill, said the new law would “provide the defendants with an incentive to make their offer of settlement a reasonable offer of settlement early on in the case.” Chris Ottele, a partner at Denver-based Holme Roberts & Owen, who represented the Colorado Civil Justice League, which opposed the bill, disagreed. “The net result is going to be that there will be fewer settlements,” Ottele said. Settlements Encouraged Unlike most states, Colorado enacted a statute in 1990 designed to encourage settlement of civil cases. In cases in which a plaintiff rejected a defendant’s settlement offer, the statute allows the defendant to recover litigation costs for the period beginning after the offer of settlement to the end of trial. But in 1999, a Colorado appeals panel, in interpreting the statute, ruled that the plaintiff in a car accident case could not recover any costs because she obtained an award of $22,032, less than the defendant’s previous settlement offer of $27,500. Bennett v. Hickman, 992 P.2d 670 (Colo. App. 1999). Since then, several courts have followed that decision. “The statute, as interpreted by the Court of Appeals, discouraged rather than encouraged the early settlement of civil cases,” said David Driscoll, a member of the civil litigation section of the Colorado Bar Association. Specifically, since the 1999 ruling, defendants have dragged out their settlement offers, boosting litigation costs for plaintiffs. In 2005, the Colorado Bar Association introduced a bill that would have allowed a prevailing plaintiff to recover costs after rejecting an earlier settlement offer. That bill died. But the recent bill, introduced earlier this year, seeks similar remedies. “What happens is the plaintiff is entitled to recover its costs from the beginning of the case up to the point that the offer of settlement was made,” said Koclanes of Denver’s Netzorg McKeever Koclanes & Bernhardt. “And the defendant can recover from the point in time the offer of settlement was made up through trial.”

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