Wednesday, July 07, 2010

Demand Letter (Litigation Checklist)

This demand letter checklist and list of best practices is part of my Colorado Litigation Checklist approach to litigation knowledge management and litigation strategy.  The demand letter can be one of the most important and effective tools in a litigator's arsenal--it sets the stage for the dispute, often opens negotiations between the parties, and has the potential to resolve the issue early and in expensively.  Unfortunately, this opportunity is often squandered with a poorly thought-out letter.  The following checklist and list of best practices are intended to help litigators better utilize the demand letter:
- Address letter to most appropriate person--consider whether this is the person with most intimate knowledge of situation or person with authority to resolve/settle issue.
- Include header stating that letter is a confidential settlement communication pursuant to C.R.E. 408.
- State that you/this law firm represent your client and the matter in which you have been retained.
- Request that all future communications regarding this matter be directed to you.
- Outline factual situation surrounding issue/dispute.
- Address any previous correspondence or negotiations between the parties, rejecting previous offers if applicable.
- State potential claims that client may assert, including legal and factual support as applicable (see below).
- If contract or applicable statute requires that any specific notifications be made, ensure that these notifications are made and meet all requirements (i.e. requirement to state applicable statute, to send notice by certified mail, etc.).
- State damages, including legal and factual support as applicable (see below).
- Consider preemtively addressing anticipated defenses (see below).
- State demand:  what they must do (i.e. pay money, refrain from action, etc.), what you will do in exchange (i.e. settle all claims), method of acceptance of offer, deadline for acceptance of offer.
- State that this letter does not purport to list each and every [tort][act of default under contract].
- State that client reserves all rights, remedies, and claims against recipient of demand letter and against all others responsible for client's damages.
Thoughts & Best Practices:
- Consider sending demand letter via certified mail, return receipt requested, unless prior dealings with the recipient make this unnecessary.
- Consider including legal and factual support for claims, including potentially list of elements of claim and corresponding factual support or applicable statute, depending on sophistication of party and strength of client's case.  Consider whether convincing opposing party of the strength of your claim will facilitate or hinder a favorable early settlement.
- Consider including legal and factual support for damages.  Particularly when you can reasonably support damages significantly in excess of your demand, or where you can reasonably argue that you will recover significant costs and/or attorneys' fees if litigation proceeds, this may be an effective settlement tactic.  Also consider whether opposing party has already retained an attorney or whether you are attempting to resolve the dispute before they retain an attorney. 
- Consider attaching documentary support where appropriate, but consider whether the information disclosed will also educate the opposing party about any weaknesses in your case.
- Consider whether a firm demand (e.g. "Pay X by Y Date") will hinder swift resolution of issue, and consider whether it would be better, especially in an initial letter or where there is real potential for cure, to simply state "If [recipient] fails to respond appropriately [under its duty or any applicable contract], [client] will evaluate all of its rights and remedies with respect to this matter."
- If litigation has already commenced, consider whether any demand letter should also serve as a statutory offer of settlement.
- Consider the form of the ultimate settlement agreement between the parties when drafting a demand letter.
- Consider whether demands should include litigation hold/preservation of specified evidence in anticipation of litigation, or request to make certain evidence available for inspection.
- Use demand letters for more situations than the total resolution of claims (i.e. to demand the preservation of evidence relevant to a claim).
Example Forms:
- Click Here for Template Demand Letter (Locked)
- Click Here for Publicly Editable Demand Letter (Please feel free to make improvements to this form, and comment below to describe what changes were made)
Jeff Vail is a business litigation attorney in Denver, Colorado.  Visit for more information.
This demand letter checklist and list of best practices is part of my Colorado Litigation Checklist approach to litigation knowledge management and litigation strategy.


Anonymous said...

Thank you for your generousity in posting all this important information. I am not in Colorado, but I can certainly tailor your work to California.

I wish more lawyers would do what you are doing.

Anonymous said...