There are several reasons why this is important.
Firstly, the Courts expect all parties to behave reasonably and to try to settle their matters. This is not the same as saying someone must make an offer of settlement but it is important that clients understand that if an offer of settlement is not made and there is no attempt to settle a case, then the Court can take this into consideration on whether or not to award a party their legal costs.
Secondly, a good offer of settlement does have tactical value. If it is beaten at trial, this can later be highlighted and the Court might look favourably on this and consider awarding a greater portion of the offeror’s legal costs.
There are also some special types of offers which can be made, called Part 36 Offers, which if beaten at trial, will significantly improve the prospect of a more favourable costs award being made for the offeror.
However, an offer of settlement must be genuine. If a Court considers that it was made solely for the purpose of securing a tactical benefit, the Court is likely to disregard it when considering what costs to award.