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Is it worth sending a demand letter before a lawsuit?

Claudia Diaz - Demand Letter - September 25, 2023

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    While it is up to you to decide whether or not it's worth sending a demand letter before filing a lawsuit, demand letters are a cost effective way to resolve your dispute out of court.

    Why? Demand letters are a relatively, quick, easy, and cost-effective form of dispute resolution. A well-crafted demand letter can help you settle your dispute without having to go to court

    Did you know we have a free tool powered by AI that helps you create a demand letter? Check out our demand letter tool.

    How to Decide Whether or Not It's Worth Sending a Demand Letter?  

    A demand letter is a formal written communication you can send to a business or individual you have a dispute with. In your demand letter, you can request that the recipient take some type of action to resolve the dispute at hand. 

    To help you figure out if it's worth sending a demand letter or not, we suggest you use a cost v. benefit analysis. This can be a useful tool to evaluate the potential advantages and drawbacks of taking specific actions, like sending a demand letter. Consider some of the factors described below when making your analysis.  

    Cost: Time and Effort Needed to Write and Send a Demand Letter 

    Preparing and sending a demand letter can be quick, and easy to write. 

    • Demand letters don’t need to be long, in fact, effective demand letters may only need to be one page. This is because the more clear and concise you are in your letter, the better. If you include too many miscellaneous or unrelated facts, you are at risk of confusing the recipient of the letter. If the recipient doesn’t understand your claims, they aren’t likely to reply to your demand letter. 

    • You can write a demand letter on your own or use a free demand letter tool like ours! Our AI power demand letter tool helps people create demand letters for free. We also provide free demand letter templates that can be used to write various types of demand letters. 

    • You can also hire an attorney to write a demand letter for you. This way, you aren’t spending any time or effort actually writing or sending the letter, an attorney can do that for you. However, you will have put in the effort of finding an attorney that will help you with your demand letter. This option is also not guaranteed to be free.

    Cost: Cost to Write and Send a Demand Letter  

    Demand letters can be free or very low cost if you write and send the letter on your own.

    If you would like an attorney demand letter, it may be free, as some attorneys offer that option in certain cases (for example, personal injury cases). However, most attorneys charge clients for demand letters.

    Nonetheless, sending a demand letter is still more cost-effective than initiating a lawsuit.  

    Benefit: A Demand Letter Could Lead to a Resolution 

    Demand letters serve multiple purposes; they signal to the recipient you are serious about resolving the dispute at hand, they help you explain your position and make requests, etc. 

    • The main purpose a demand letter serves is to help you settle your dispute outside of court

    • 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 shows you are willing to work with the recipient of the letter to settle the matter. For example, “I look forward to resolving this matter amicably, and I am amendable to discussing this matter in mediation or through less formal means.” 

    • By resolving your dispute outside of court, you won’t have to worry about the court costs associated with taking someone to small claims court.  

    Benefit: A Demand Letter Can Be Used as Evidence 

    A demand letter can be used in court as evidence in the event you do end up taking legal action. 

    • A demand letter can be used as evidence that you sent written notice before filing your lawsuit. This is especially important if your claim is based on a federal act or state statute that requires you to provide notice before filing a lawsuit. 

    • A demand letter can be used as evidence of your good-faith attempt to settle

    • 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 an explanation of how your landlord violated state law by failing to return your security deposit. 

    Benefit: A Demand Letter Signals to the Recipient You Are Willing to Take Legal Action

    Sending a demand letter can demonstrate to the recipient that you are willing to take legal action if necessary, which will further encourage them to settle the dispute right away. This is why we recommend you end your demand letter with a statement about your intent to sue if you don’t receive a response to your demand letter. 

    Continue Reading: Do demand letters work?

    Next Steps After Sending a Demand Letter

    After sending a demand letter, you will have to wait to see if the recipient responds or ignores your demand letter

    If you receive no response, here are two steps you can take: 

    1. Send a final demand letter. 

    2. Sue in small claims court. 

    Send a Final Demand Letter

    Consider sending a final demand letter if you have already sent a demand letter to the recipient. The recipient may just need one final notice or another opportunity to consider settling the dispute.

    Learn about the reasons why you may not have received a response to your demand letter. 

    Sue in Small Claims Court 

    If, after sending a final demand letter, you still haven’t been paid, consider suing in small claims court.  

    Small claims courts were designed to provide an accessible and cost-effective way for individuals and businesses to resolve their disputes without the need for a lawyer. In most cases, the parties involved will represent themselves in court.

    Here are some common types of cases filed in small claims courts: 

    • Your landlord did not return your security deposit.

    • Someone hit your car and won’t pay to reimburse you for the costs of fixing your car. 

    • Your clients won't pay you for services rendered or issue unjustified chargebacks

    • You lent someone money, and they won't pay you back.

    • You hired a mechanic to repair your car, and they did a terrible job.

    • You contracted with a painter to come paint your home, but they never show up. 

    • You paid a contractor to fix your roof, but they never showed up.

    • An airline lost or damaged your bags. 

    • Your tenant refuses to pay rent.

    How much can I sue for in small claims court? 

    The amount you can sue for in small claims court is known as the small claims limit. This amount varies by state and even by court. 

    This means you can only sue up to that amount in small claims court. If you want to sue for more than the small claims limit, you will have to waive whatever amount is over the limit or consider suing in a regular court (however, this is going to be more expensive). 

    How long do you have to sue in small claims court? 

    States have set deadlines, called statutes of limitations, that let you know by when you should sue someone. These deadlines will vary by state and by type of claim. For example, if you are filing a small claims lawsuit against a mechanic for property damage, you would need to look up the property damage statute of limitations in your state. 

    Did you know we have a free tool powered by AI that helps you create a demand letter? Check out our demand letter tool.


    Claudia Diaz

    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.

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