The Effective (and Ineffective) Use of Demand Letters

     Many lawyers and their clients love demand letters. The reason for this is simple: it is a potential cost saver. If the lawyer can clear up with a demand letter, what could otherwise be accomplished only through a time-consuming and expensive lawsuit, the client has won a tremendous battle. Litigation is often decided based upon costs. Thus, if counsel can save his client substantial  sums, by resolving a case with a demand letter only, the client has won. However, demand letters are subject to certain pitfalls which counsel should be careful not to fall into.

  1. When to Send  A Demand Letter

     I confess that I do not like it when clients approach me to “just sent a demand letter”.  As lawyers, we greatly prefer clients who are prepared to follow through on their threats. We do not want to be enlisted by a bluffer. After all, a client who only wants his lawyer to send a demand letter is basically asking to exploit the lawyers’ letterhead for a discount or no fee at all hoping that his adversary will fold at the mere sight of the lawyer’s name. Moreover, if all I do is send a demand letter which is not followed by an actual lawsuit it will likely diminish my reputation as a litigator and label me with the opposing side as a bluffer. This a reputation that I do not have and that I do not want.  

      2. What to Say in the Demand Letter

     The demand letter should identify your client, the basis for his or her claim and state the amount of money requested. For consumer cases, a disclaimer as required by the Fair Debt Collection Practices Act should also be included. The demand letter should contain a time reference within which the opposing party has to comply. Demand letters with open ended response times have no effect and will often be ignored.

     Additionally, you may want to consider ignoring such catchphrases as “Please Govern Yourself Accordingly.” What does that mean anyway? Wouldn’t it be better to simply use English and say – – “if you do not respond, you will be sued.” I like that better; it is more direct and there is no doubt as to what the consequences will be if the opposing party fails to respond.

     3, What Not to Say in the Demand Letter.

     In a recent case from California,  a lawyer who sent a demand letter was later sued by the opposing party because of the statements made in the letter. In the demand letter in question, the lawyer threatened to expose  certain sexual liaisons of the opposing party unless the lawsuit,  which had not yet been filed, was “resolved to his client’s satisfaction.” The demand letter was also followed by several efforts to hack the opposing party’s e-mail and eavesdrop on their telephone conversations. The California Superior Court thought this was just too much and denied the motion to dismiss filed by defense counsel for the lawyer. The matter is now on appeal and has been widely discussed in the legal press. See generally http://www.abajournal.com/news/article/was_well-known_lawyers_demand_letter_extortion_appeals_court_to_hear_argume/?utm_source=feedburner&utm_medium=feed&utm_campaign=ABA+Journal+Top+Stories&utm_content=Google+Reader.

      What is the lesson to be learned from this case? The first lesson is to be careful what you say. If you want something for your client, and most of the time in the commercial context it is money, be specific. Show in your demand letter that your client is entitled to the money by attaching a copy of the contract or invoice. Do not say things such as “unless this matter is resolved to my client’s satisfaction”. What exactly does that mean? This is likely one of the things that the California court found troubling (not to mention the computer hacking and eavesdropping).

     The California case provides an excellent example of a lawyer going “over the top” in order to accomplish the ends of his or her client. Lawyers should be careful not to over-promise their clients a particular result. Let’s face it, if we really wanted to help assure the client’s objective to collect money, rather than filing a lawsuit, we could simply send Luca Brasi[1]  to the opposing party’s place of business and cut off the heads of one of their horses. My guess is that the Bar would probably not appreciate this. This is not our profession. Our profession requires us to act zealously within the bounds of the law. Toward that end, it is the careful lawyer who tells his client what his limitations are and that if he wishes to obtain another type of justice, another type or professional might be required.

For a portion of the briefing on the California case, see http://www.scribd.com/doc/141257870/Respondent-Brief.

 

 


[1] For more information on this character in the Godfather, see http://en.wikipedia.org/wiki/Luca_Brasi

2 Comments

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2 responses to “The Effective (and Ineffective) Use of Demand Letters

  1. Deborah Monaco

    Hi Roger, Not sure were you had gone off to…now I know. Hope you are well. Great article. Thanks!

    Like

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