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June 24, 2025
By: Sarah D. Jeong

A Dispute is Unraveling: The Demand Letter

In the realm of business and personal interactions, disputes are an inevitable occurrence. Understanding the early stages of a legal conflict is crucial for navigating these situations effectively. One commonly used approach in the early stages of a dispute is the demand letter.

While not necessarily a guaranteed way to avoid litigation, a demand letter can be an important tool. It allows the parties to clarify their position and provides one final opportunity for resolution before formal proceedings are considered.

What is a Demand Letter?

A demand letter is a “letter written on behalf of a client in which an attorney demands that the recipient take or cease taking a certain action.”[1] Whether you are the sender or the recipient, it is important to understand the underlying issue, evaluate the opposing party, gather all relevant documentation, and respond carefully to any further communication. [2] The remainder of this article will be written as if the demand letter is being sent to a potential defendant.

Avoid Reactive Decision-Making

When drafting a demand letter, it is helpful to frame the situation as a potential gain for the recipient. For example, one benefit might be avoiding the costs and stress of litigation. However, this approach should be tailored to the specific situation, considering the nature of the dispute and the defendant’s values and expectations. This is why it is essential to evaluate both the facts and the opposing party before sending the letter. Avoid reactive decision-making such as quick email responses or making promises that cannot be fulfilled before carefully thinking through your position.

Using Facts to Support Your Position

Next, gather facts and documentation that link as clearly as possible the legal claims involved. Put another way, “connect the dots” for the recipient. A strong demand letter tells a story that makes the outcome feel not only foreseeable, but fair. Prior communication, such as emails, a previous demand, or missed deadlines, can help reinforce that the recipient was made aware of the issue and had a chance to correct it. Including these details helps shift the letter away from sounding like “victim-blaming” and instead presents a self-supporting narrative, the conclusion of which is the action or the non-action of the letter’s recipient.

For example, consider a situation where a homeowner hires a contractor to remodel their kitchen. There is no formal written agreement but a series of text exchanges between the parties outlining the scope of work, timeline, and payment structure. The agreement is reached, and the contractor receives their deposit and starts the work, but as time goes on, progress and communication slows, and the kitchen remains unusable.

At this point, the homeowner may seek to hire an attorney to send a demand letter. In this case, the demand letter may aim to both end the business relationship and request return of the deposit. It may directly quote certain promises made by the contractor in the text messages. Quoting the contractor’s own words places those statements into present context and puts pressure on the contractor to follow through.

The letter can conclude by giving a deadline for the return of the deposit, emphasizing the urgency of the matter due to the ongoing inconvenience of a non-functional kitchen. It may also highlight that resolving the matter at this stage will likely cost the contractor less than if the dispute were to proceed to litigation.

What to Expect After Sending a Demand Letter

Finally, be prepared for what may come after the demand letter is sent: the recipient might comply, initiate settlement discussions, or prepare to defend against legal action. Regardless of the outcome, it is important not to view the demand letter as necessarily the prequel to litigation. In many cases, it can serve as a final attempt to resolve a dispute efficiently and outside of court.

Conclusion

The early stages of a legal dispute require a strategic approach to effectively manage disputes. From crafting a compelling demand letter to gathering comprehensive documentation and engaging in thoughtful negotiations, each step plays a vital role in the resolution process. By avoiding reactive decisions and considering the options of settlement or litigation, parties can navigate disputes with confidence and clarity.

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[1] Bret Rappaport, A Shot Across the Bow: How to Write an Effective Demand Letter, 5 J. Ass’n Legal Writing Directors 32, 34 (2008) (quoting Bret Rappaport, A Shot Across the Bow: How to Write an Effective Demand Letter, 5 J. Ass’n Legal Writing Directors 32, 34 (2008)). [2] Id.