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Did you know that more lawsuits are settled than actually decided in court? A demand letter not only can help you achieve a settlement in a dispute but also serve different purposes. Even though the success rate of demand letters varies based on multiple factors, demand letters don’t require too much time, effort, or cost to work.
Did you know we have a free tool powered by AI that helps you create a demand letter? Check out our demand letter tool.
What Purposes Do Demand Letters Serve?
A well-crafted demand letter can not only help you settle your dispute but can also serve the following purposes:
Demand letters help you explain your position to the other party.
Demand letters can help open settlement discussions.
Demand letters act as notice of your intent to sue.
Demand letters can be used as evidence in the event legal action is taken.
Below we break down the four different ways demand letters work.
Demand Letters Explain Your Position to the Other Party
An effective demand letter should outline your position and demands to the person or business you have a dispute against. For example, if you have a dispute with someone for property damage, your demand letter should state not only what the other party should do to resolve the dispute but why they need to meet your demands.
Demand letters not only help the other person understand the dispute from your point of view, but also help you think through every aspect of your case, including the important facts, your legal arguments, and the evidence you'll need to prove your claim.
Demand Letters Open Settlement Discussions
By sending a demand letter, you are demonstrating to the other party you are open to finding ways to resolve the dispute at hand. Consider including a line in your letter that says something like, “I look forward to resolving this matter amicably, and I am amendable to discussing this matter in mediation or through less formal means.”
Most cases are settled before ever going to court. A comprehensive study done in 2015 by the National Center for State Courts, a non-profit organization that documents emerging issues and trends in state court administration, found that around 1/3 of cases were dismissed probably following a settlement. By sending a demand letter, you are one step closer to possibly settling your dispute.
Demand Letters Give Notice to the Other Party
It is common to end a demand letter by giving the other party a deadline by when they have to meet your demands and stating that if they don’t, you intend to sue.
Demand letters are effective as notice of intent to take legal action. This is especially important if your claim is based on a federal act or state statute that requires you to give the person or business you are suing notice before filing a lawsuit against them.
Demand Letters Can be Used as Evidence
If you do end up taking legal action against someone or a business, you can use your demand letter as evidence in small claims hearings.
A demand letter shows the court you made a good faith attempt to settle before escalating the case to small claims court.
A demand letter can be used as evidence of your position in the case and what damages the other person or business caused you. For example, you are suing your landlord in small claims court because they refuse to return your security deposit. In your demand letter, you can include your state’s security deposit laws and how they failed to return your security deposit as required by law.
Attorney Demand Letters v. Non-Attorney Demand Letters
A demand letter does not have to be written by an attorney. You can write your own demand letter and send the demand letter using your preferred method (learn more on how to send a demand letter).
Consider some of these factors when deciding whether or not to hire an attorney:
Cost. Naturally, when thinking about hiring a lawyer, you should keep the cost in mind.
The complexity of your case. If your case is especially complex or the dispute at hand concerns a specialized area of law like negligence or personal injury, it may be worth hiring a lawyer to help you with your demand letter.
Credibility. Sending a demand letter from a lawyer may give your letter more credibility and weight.
Ultimately, a demand letter sent by a lawyer may be more effective than a non-attorney demand letter. Just make sure you consider the costs before following this route.
What are the Next Steps After Sending a Demand Letter?
After you send your demand letter, you can expect one of three outcomes:
The other party responds and meets your demands.
The other party responds but would like to discuss it further.
The other party ignores the letter or refuses the terms of the letter.
If your demand letter is ignored or the response you received does not adequately address your demands, consider sending a final demand letter before taking legal action.
If, after sending a final demand letter, you still haven’t resolved your dispute, consider suing in small claims court. Small claims court is a type of court where individuals and businesses can resolve disputes involving relatively small amounts of money in a cost-effective and efficient manner. Small claims courts handle a wide range of disputes, including unpaid debts, breach of contract, property damage, and landlord-tenant issues.
Learn more: How long after sending a demand letter should I expect to receive a settlement?
Legal Educator @ People Clerk. Claudia holds a J.D. degree and is a certified mediator in New York and Florida. She has participated in dozens of small claims mediations in New York City courts.