Joseph G. Ballstaedt
Before a lawsuit is filed in Utah, the parties in conflict may have already exchanged demand letters, setting forth their version of the facts and how they want the problem solved. These demand letters, often written by an attorney, let the other side know that the dispute is a serious one that can’t be ignored and that won’t just go away. If it does not help resolve the conflict, a demand letter can set the tone of future litigation and negotiations. If written improperly, it might anger the other side, making a settlement harder or more complex. Often, a demand letter is required under Utah law or under the terms of a contract to preserve or enforce a party’s rights. On the other hand, in certain circumstances, a demand letter might be a waste of time and money. If you choose to write a demand letter or are required to send a demand letter by law, remember that a judge may review and consider its contents at some point during litigation. The opposing party is not the only audience.
It is generally a good idea to consult an attorney about whether a demand letter is necessary, whether it will be helpful, and what it should include. The above considerations and other helpful points are discussed in more depth below.
1. A demand letter shows that the dispute is a serious one that can’t be ignored.
“Speak softly and carry a big stick; you will go far.” This quote is a good way to think about a demand letter. It should try to get the other party to act favorably, and a letter that merely angers the other party is probably not worth sending. A demand letter is generally better and more likely to achieve its intended purpose when it is written in a professional manner (or, the speak softly part). This does not mean that a demand letter cannot be firm and set forth the realities of the conflict. Generally, an effective demand letter lets the other party know that you are reasonable, serious, and ready to pursue your legitimate claims and that there are specific and real consequences to not complying (the carry a stick part).
Every dispute is unique, but many parties or companies will not take you seriously (and may not believe that you have or will use a stick) until or an attorney sends a demand letter. A party who has completely ignored you or rejected your demands may immediately fold over when he gets a letter from your attorney, fearing the possibility of being pulled into litigation in a Utah court. Unfortunately, even after receiving a demand letter, the other party may continue to ignore the problem, not believing you have a stick until you get a Utah judge involved by filing a complaint in the judge’s court.
Although others may ignore a demand letter, if you receive one, do not ignore it. If a party has hired an attorney to write a demand letter, he is likely willing to take the dispute to the next level by initiating a claim in a Utah court. He isn’t likely to go away if his demand letter is ignored. Often, ignoring a demand letter just increases costs for everyone because more attorney time, court costs, and collection efforts are necessary, and the ignoring party may ultimately be responsible for those additional costs. An attorney fee provision in a contract may state that the winning party can recover his attorney fees, and there may also be Utah statutes that govern the dispute and say the same. In short, it is rarely wise to brush off a demand letter.
2. A demand letter sets the tone for settlement negotiations.
Some studies estimate that about 80 to 90 percent of cases are settled before trial. So, the reality is that most demand letters lead to settlement, not a verdict from a Utah jury or judge. There are also studies that suggest that civil disputes are better resolved through a settlement between the parties rather than a verdict from a jury or judge. One of the biggest reasons is that litigation can be very expensive.
Thus, the person you need to win over in a civil dispute is probably the opposing party, not a jury or court. And the demand letter is sometimes the first step in setting an appropriate tone for negotiations and convincing the other side to meet your demands (i.e. settle) rather than allow the matter to escalate to litigation. As stated earlier, a professional letter that does not attempt to provoke the opposing party to anger will more likely lead to a collaborative resolution. This letter may be the first communication between the parties or their attorneys, and the first impressions created through these letters can be very difficult to overcome. If a demand letter is seen as an attack on the other party, this party may simply become more entrenched in his position, regardless of how unreasonable that position may be. For this reason, a demand letter should avoid highly provocative and threatening language and should certainly avoid personal attacks that disparage the other party.
A demand letter is an opportunity to explain the law that governs the facts at issue in such a way that the other party will see the wisdom in your proposed course of action. The idea is to paint the picture so clearly that he concludes that the only reasonable course of action to the problem at hand is the solution you propose. An attorney with a good grasp of the facts and the controlling law can write an effective and persuasive demand letter.
3. Sometimes demand letters are required to preserve or enforce your rights.
In addition to helping with settlement negotiations, sending a demand letter may be required by a contract or by a Utah or federal statute before a party can enforce his rights in court. For example, if there is a dispute between parties to a contract, the contract may state that the complaining party needs to bring the issue to the other party’s attention before filing a complaint. Often, this notice must be in writing—or in the form of a demand letter. Also, some state and federal laws require notice to the opposing party in some form of demand letter before a party can sue. A lawyer with experience in Utah and federal law will know whether a demand letter is required and what that demand letter should contain.
4. A demand letter may not be appropriate.
Although generally not the case, a demand letter may not be appropriate for several reasons. Perhaps a party has already engaged in extensive negotiations and reached an impasse where the only productive next step is filing a complaint. Some disputes require immediate intervention from a Utah judge, and a party may need to immediately ask a judge for an order that secures or protects property that is about to be destroyed. A demand letter would be futile. After filing the appropriate motions to the court and obtaining temporary relief, a demand letter may then be a good idea. At other times, a party might not respond to a demand letter, so writing one would only create unnecessary costs and delay. Each case is different, and an experienced attorney can assist in knowing what plan of action will be most productive and whether a demand letter will be helpful.
5. The recipient of the demand letter is not the only audience to keep in mind.
The intended recipient of a demand letter may not be the only person who reads it. Demand letters and other correspondence between parties to a legal dispute are often introduced as evidence when litigation erupts, although demand letters may be excluded under certain rules of evidence in Utah. For this and other reasons, demand letters should not contain frivolous or unreasonable demands, which may very well weaken a party’s credibility in the eyes of the court. Also, even if a demand letter does not result in a settlement, it can help you in litigation. For example, if a party wins a case, that party is often entitled to recover its “reasonable” attorney fees, and a Utah judge decides whether attorney fees are reasonable and in what amount. If this judge has evidence in the form of a written demand letter that a winning party attempted to resolve the matter well before the case was filed, warning the other party that it would be liable for attorney fees incurred in litigation, a judge may see this settlement attempt as a factor supporting reasonableness, and that party will more likely recover all fees paid to his own attorney.
If you have questions about whether a demand letter is appropriate and what it should contain, I am happy to help. I offer a free consultation. My direct dial is 801-365-1021, and you can e-mail me at email@example.com.