Take a deep breath and relax.
Few things can elicit anxiety as effectively as a demand letter from a lawyer. These letters are designed to convey a sense of authority and finality; they are meant to be intimidating. However, it is important to understand that a demand letter is not a judicial determination and it has absolutely no legal authority.
Rather, the demand letter is simply a threat: “You do a or we will do b.” In this equation, a is generally the payment of money and b is the initiation of a lawsuit. At the same time, the demand letter is also an effort by the other side to avoid the very litigation it threatens to bring. By sending the demand letter, the other side has opened the door for settlement discussions. However, as discussed below, it is advisable to involve your own counsel before engaging in any such negotiations.
The demand itself will typically appear to be excessive and, often times, unreasonable. Keep in mind that this is not necessarily the amount required to avoid litigation; it is merely the opening offer in settlement discussions. These demands are structured in such a way so as to provide bargaining room to the party making the demand.
Typically, the demand letter will also contain a set of facts upon which the demand is premised. More often than not, these facts are either incomplete or simply wrong, indicating that the lawyer has only been exposed to his or her client’s side of the story. The inclination of most is to want to give the attorney the complete story, somehow believing the lawyer will amend or retract the letter upon learning “the truth.” Rest assured, this will never happen. The attorney sending the demand letter is someone else’s advocate; he or she is not interested in the truth. Further, any communication you do have with the attorney will, if possible, be used against you in the future. Therefore, unless it is your intention to fully capitulate to the demands set forth in the letter, it is advisable to seek legal counsel before making any response.
To review, if you are the recipient of a demand letter from an attorney, the advice is simple: Keep Calm and Call a Lawyer.