A demand letter is often a precursor to a lawsuit, and is used as a tactic to demand restitution or performance of an obligation from the recipient. A party that believes they have been wronged by the action or inaction of another party writes the demand letter (e.g. owe a debt, to settle a personal injury claim, etc.). The language within it can give an indication of the seriousness of the claim if it is well-crafted, and can help a party resolve a case without the time and expense of trial.
Demand letters are sometimes sent as a form of intimidation, but in most cases, they are the next step after failed attempts to contact the other party to resolve the situation. Below are some common reasons for why you would need to send a demand letter:
Another party owes you money either contractually, or because of an error or unlawful activity on their end that resulted in financial losses for you. A well-thought-out demand letter sent by a an experienced personal injury attorney can prompt the liable party to quickly pay if they know a lawsuit is next.
An agreement is in place for one party to complete a job for you (e.g. new roof on your house), and they either failed to complete it or there is a specific disagreement about what the second party was supposed to do.
The settlement negotiations in a personal injury claim begin with the victim (plaintiff) submitting a demand letter to the insurance companies representing the liable parties. Most often, the victim’s attorney will write and submit this letter, providing facts related to the injury accident in an effort to persuade the insurers to compensate their client fairly. Supplemental documentation is typically provided along with it, such as photographs of the accident/injuries, accident reports, medical bills, doctor’s statements, pay stubs, etc.
A demand letter should be as clear and concise as possible, stating the facts and only providing information that is relevant. Avoid attacking the defendant or the insurance company, as they will likely be less willing to work with you, making the process much more difficult. Take the facts of the case into account, then propose a settlement that you believe is fair. Include why you are asking for that amount and any relevant documentation to support it. Insurance companies will often send a counter-offer, and the negotiations may go back-and-forth. No matter how well written your demand letter is, sometimes a reasonable agreement cannot be reached. Filing a lawsuit will be the next step, and could be the motivation the recipient needs to work harder to resolve the claim.
Before sending a demand letter, an experienced lawyer should review it. They can help you estimate the value of your case and adjust the settlement request if necessary. However, you also have the option to contact a lawyer earlier in the process to help you with writing the demand letter and alleviate that stress
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