A demand letter is a letter, usually written by an attorney on a client’s behalf, outlining the dispute between the two opposing parties and demanding that the recipient of the letter take or cease a certain action. The purpose of a demand letter is to begin the negotiation process that will hopefully result in dispute resolution to avoid filing a claim in court if it is possible to resolve the issue without litigation. The demand letter is drafted to influence the recipient’s understanding of the dispute’s risks and rewards in a way that favors the client’s interests. Demand letters usually state the harm the client has suffered, the relief they request and may threaten the sender’s intent to accelerate the dispute via a lawsuit if the recipient does not respond accordingly. Certain state statutes may require prospective plaintiffs to send a demand letter to prospective defendants before they can claim a viable cause of action under the statute. Demand letters also create a paper trail, which can be useful as evidence if the good faith or reasonableness of a party’s conduct is later called into question.
Demand letters usually attempt to convince the recipient that their chance of success in litigation is low or that the expense, time commitment, and inconvenience of litigation is too high. Demand letters can be particularly persuasive when they contain legal, practical, and emotional arguments. To craft a compelling argument, it is important for the letter writer to be familiar with the recipient’s interests and goals, and to adapt the tone and content with the reader’s perception in mind.
[Last updated in September of 2022 by the Wex Definitions Team]