How to Write A Demand Letter

Demand letters come in many different shapes and sizes. Some are long and involved; others are short and directly to the point.

Whether you are writing a demand letter for breach of contract or some other reason, every demand letter is crafted to achieve a specific goal – to compel its recipient to do some action.

Demand letters are most commonly used at the beginning of litigation, prior to filing of any lawsuit.

Lawyers will frequently send a demand letter as the initial “shot across the bow” to a potential Defendant to lay out the facts, explain their client’s damages, and set out a specific monetary demand.

Here’s a short video from Youtube on drafting a demand letter. Skip down below the video for detailed specifics on how to draft your demand letter.

How to Draft Your Demand Letter

Often this letter comes after many months in which the attorney’s client (the potential Plaintiff) has attempted to compel the Defendant to settle their differences without resorting to the courts. Thus, the potential Plaintiff is often very upset at the fact that the situation hasn’t been resolved.

Although there are great variations in how demand letters are crafted, the basic structure is as follows below. Keep in mind that this basic outline may need to be customized depending on the relationship between the parties and the facts of the case.

  • Summary. The first section explains who the author is and why they are writing, and may include a quick summary of the Plaintiff’s injuries or damages.
  • Background Information.  In this section, you can explain the relationship between the parties. If the matter involves a breach of contract between two businesses, this section should explain the business relationship between the two parties.
  • Facts. Here you should explain the details regarding the incident – the who, what, where, when, and why.  If the incident was a vehicle accident, then this section will explain how it happened. If the incident was a breach of contract, then this section will explain the creation of the contract and its breach.
  • Claim for Damages. In this section, you should outline the injuries or damages.  If the incident was a breach of contract, then the damages may be fairly easy to compute based on the failure of the Defendant to make payments due under the contract.  If the incident was a personal injury resulting from a vehicle accident, then this section will include past and future medical expenses, past and future lost wages, future loss of earning capacity and benefits, and pain and suffering.
  • Demand. In the final section, you should explain what action you are demanding from the Defendant. In most cases, this will be a specific dollar amount. You should also include a deadline (typically 2-3 weeks) for a response, so that you apply some pressure.

Although demand letters are typically sent by a lawyer, anyone can send a demand letter. A demand letter is typically taken more seriously however when it is written on law firm letterhead, indicating that the Plaintiff went to the trouble of hiring a lawyer who is trained and skilled at fighting on behalf of their clients.

In order to make sure your letter has the best chance of success, you want to minimize common mistakes.  Here are the most common mistakes in demand letters:

  1. Taking Too Much of a “Hard Line.” You should have a serious demand in your letter, but you shouldn’t ask for the moon. If your demand is too extreme, it may backfire. Your opponent may become angry, or may determine there is no room for negotiation.
  2. Failing to Outline Your Damages. The Damages section to the demand letter is very important. In this section, your damages should be reasonable and directly tied to the actions of the Defendant.  Your lawyer can explain which damages arose out of the actions of the Defendant and which are not related.
  3. Failing to Specify Your Demand.  Your demand letter should specifically state what you are asking for. In most cases, this will be a dollar payment from the Defendant to you, in exchange for you giving up the right to file a lawsuit against the Defendant.  If you are demanding payment, then you need to pick a number which is reasonable and has a logical relationship to your damages.
  4. Wrong Defendant.  You want to be sure you are sending the demand letter to the right Defendant. For example, if the recipient of the letter was insured, you should send a demand letter to the correct division at the insurer’s offices. In addition, if your Defendant was an employee acting on behalf of his or her employer, you may want to send your demand to the employer as well.
  5. Too Short.  A demand letter needs to achieve more than conveying a dollar amount; it needs to clearly and succinctly lay out all of the reasons why you would be likely to win a lawsuit against the Defendant if you are forced to file a lawsuit. For that reason, your demand letter cannot be too brief.  Write the letter as if your recipient has very little knowledge about the facts surrounding the case or any previous negotiations between the parties, and you will be likely to include all the details that need to be included.

Finally, you should include with the demand letter any relevant documentation that supports your claim, including the contract if there was a breach of contract, and any relevant prior correspondence between you and the Defendant.

I also commonly include a final draft of the complaint with demand letters. I do this for two reasons: (1) the Defendant is likely to take the demand letter much more seriously if they see you have drafted a complaint and all you have to do is file it, and (2) since most demand letters are unsuccessful, you might as well draft the complaint and get the benefit of including it, since you will probably have to draft it later anyways.

Do you have any tips or tricks that have worked well in demand letters? Let us know in the comments below.

If you need help creating your own demand letter, you may want to take advantage of my firm’s $225 flat-fee 60-Minute Demand Letter Review & Consultations in person or over the phone.


Like this entry? Sign up for our FREE, 10-part Entrepreneur’s Business Startup & Growth Course. Or sign up to receive the latest updates via RSS feed.


Related Reading:

Photo credit: Flickr/Mike McCaffrey