A demand letter is a letter, usually written by an attorney on a client’s behalf, demanding that the recipient of the letter take or cease a certain action. The purpose of a demand letter is to begin legal negotiation between opposing parties that will result in dispute resolution rather than litigation, and 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 sender has suffered, the relief the sender requests, and may threaten the sender’s intent to accelerate the dispute via a lawsuit. Certain 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 June of 2020 by the Wex Definitions Team]