Can a demand letter be too demanding? Of course! Too often, demand letters are treated as the first round of litigation, rather than an opportunity to avoid litigation. After all, only a small percentage of legal disputes actually go to trial. If drafted well, a demand letter will open the doors to a satisfactory settlement for your client.
Demand letters often come into play after initial verbal communications have failed. There is already tension between the two parties, but the other party has not yet appreciated the potential for costly litigation which may end up in an unfavorable judgment. This is where the power of the written word comes into play. The demand letter is the sine qua non of the negotiation process, especially in negotiations with insurance companies. A demand letter puts the other party on notice that your client is not going away. It forces the other party to seriously consider the costs of potential litigation, not unlike the effective “shot across the bow” of historical naval warfare.
While the demand letter serves to put the other party on notice of potential litigation, in most cases, it should be designed to actually avoid litigation. This is accomplished primarily by the tone of the letter. The letter must not be an attack or filled with contentious language. The goal is to encourage the other party to make a calculated decision in which he considers such factors as risk, cost, and publicity. These factors favor your client and should be illuminated through succinct argument and well-crafted language.
Risk
Here is where the demand letter must emphasize the legal liability of the other party. Be convincing. Present facts in a way that emphasizes the fault of the other party and the innocence of your client. Convince the other party that if they do not take your demands seriously, not only do they risk meeting you in court, but they also seriously risk walking away the loser. Attaching a draft Complaint may send an even louder message.
Cost
Here is where the demand letter must present your client’s damages, past, present and future, economic, and non-economic. Identify the injuries sustained by your client followed by a summary of the medical treatment your client underwent as a result of the incident. Be honest in your presentation of your client’s injuries and include actual medical records confirming the diagnosis whenever possible. An exaggerated or false claim may be summarily dismissed by the other party, especially a wary insurance company. In demanding a settlement amount, consider the general rule that most cases settle in the range of three times the total medical bills. As such, include the total amount of medical costs incurred by your client. If your client has insurance covering their medical expenses, reducing the total outstanding medical bills, explain that the general rule does not apply to your case.
Publicity
Here is where the demand letter must stimulate the imagination of the opposing party. Be creative. Make it clear to the other party that litigation is not in their best interest. Ultimately, the opposing party would like to move past the dispute and to continue their business as usual. However, should a lawsuit be filed, precedents will be set and negative publicity will ensue. These are factors that must be brought to the forefront of the opposing party’s attention.
After addressing each factor, explain that you have not yet initiated litigation because your client is still willing to negotiate. At the same time, leave no doubt that if reasonable terms are not offered, your client will proceed with filing a lawsuit. The key in making your demand understood is not to be so demanding, but instead to let the argument and facts of your case affirm your demand.
Need to draft a demand letter? De Novo Review can help!