How to Write a Settlement Demand Letter

!A list of the elements of a demand letter: the facts, the issue, your demand, their deadline, and the consequences.!A list of the elements of a demand letter: the facts, the issue, your demand, their deadline, and the consequences.Demand letters are an essential dispute resolution tool, used in almost all kinds of cases. You'll find them in everything from simple, $1,500 breach of contract fights to complicated, $15 million product liability lawsuits. They're especially common in personal injury claims involving car accidents and dangerous property. In a well-written settlement demand, you describe the facts, explain why the other side is legally responsible, and demand a specific amount to settle your claims.

We explain what makes for an effective settlement demand letter, when it makes sense to send one, and what your letter should include. Along the way, we'll also cover what to do before you start writing, and common mistakes you'll want to avoid. We close with a couple of sample demand letters you can use as models when you're preparing your own.

In This Article

What Makes an Effective Settlement Demand Letter?

Unfortunately, there's no magic demand letter formula that will guarantee a settlement. In a simple case where the facts are clear, a demand can be short and to the point. When there are several parties, the facts and legal issues are complex, and expert witnesses are involved, the letter might be several pages long, supported by notebooks full of exhibits.

Regardless of length or complexity, though, all well-drafted demands share a few characteristics. They:

are clear and well-organized
stick to the facts, the evidence, and the law, avoiding overheated rhetoric, hyperbole, and emotion
clearly explain why the recipient is legally to blame and (if applicable) you are not
make a reasonable, legally supported settlement demand, and
let the recipient know when you expect a response.

When Does It Make Sense to Send a Settlement Demand?

Timing is an important part of the settlement and demand letter process. When it makes sense to send a demand will vary from case to case, but here are two basic guidelines to keep in mind.

Don't Wait Until It's Too Late: Keep an Eye on the Statute of Limitations

You've only got so much time to sue in court. A state law called the "statute of limitations" puts a lawsuit-filing deadline on your case. As soon as you think you have a legal claim, find out when the deadline expires and mark it on your calendar.

Set a reminder for three to six months before the statute runs out, and time your demand so that you have ample opportunity to negotiate before you're forced to sue. While there's no hard-and-fast rule, if you allow a 90- to 180-day cushion, you should be fine. Just keep an eye on the calendar.

If you're unsure—statutes of limitations can be deceptively complex and difficult to apply—get help from a lawyer.

Don't Make a Demand Too Early: Complete Your Investigation First

At the other end of the spectrum, you generally don't want to attempt settlement until you've had a chance to do a complete investigation, uncover the relevant facts, and—in cases that involve personal injuries—your treating physician has told you you're at "maximum medical improvement." Don't be so anxious to settle that you sell your claims short.

Sometimes, injuries and losses don't show up right away. When personal injuries are involved, follow your doctor's lead on medical care and treatment. Hold off on settling until you've been released from care, unless the statute of limitations is a problem.

Organize and Gather Evidence Before You Start Writing

When it comes time to make a settlement demand, you might be tempted to just sit down at your computer and start typing away. That's usually not the most efficient way to approach it. Instead, start by taking some time to organize your thoughts and gather all the evidence you'll need. You don't want to have to stop writing and lose the flow of your work to go hunting for a document, photo, or witness statement.

In addition, take some time to organize your thoughts and draft an outline of the letter. Put yourself in your opponent's shoes. What might you say that will help them to see the benefits of a settlement, as opposed to a court battle? Keep your eye on the prize: Your goal isn't to punish the other side, or to exact retribution for what they did to you. You want a prompt, fair settlement, and nothing more.

So, what kinds of evidence do you need? Generally speaking, your proof will fall into a couple of categories.

Documents, photos, and tangible items. This evidence is likely to vary significantly, depending on the kind of case you have. As examples, let's compare the evidence you might want in a breach of contract case to that which you'll likely need for a personal injury suit like a slip and fall or a car accident.

In a contract case, you should have a copy of the signed agreement, if you have one. What if you don't? Chances are that you and the other side negotiated the deal by exchanging letters, texts, or emails. Have those ready. If you made contemporaneous notes of phone conversations where you haggled over terms, those might come in handy, too. A signed bid or estimate you accepted for work on your home or auto can also be used to prove up your contract.

In a personal injury case, by contrast, you'll want to get copies of:

your medical records and bills
photos and videos of the accident scene, the vehicles involved, and your injuries
documentation to prove your lost wages or earnings, like a letter from your employer and copies of your tax returns, and
a copy of the police report.

Witness testimony. You'll need witnesses in almost every case. Though you're a party to the dispute, in court, you'll almost certainly be a witness as well. Whenever possible, it's a good idea to arrange for others who were eyewitnesses to testify. If a case involves scientific, medical, or other technical issues or claims, you might need an expert witness to explain the case to the judge or jury.

What Should a Settlement Demand Letter Include?

Regardless of the type of case, every demand letter will include these elements.

The facts of the case. Describe, in as much detail as necessary, what happened and how, who was involved or witnessed it, and when and where critical events took place.
Why the recipient is legally responsible. In this part of the letter, you explain the legal rules involved and why your opponent is to blame. When your own fault or other defenses might be used against you, you should anticipate those arguments and head them off.
Your settlement demand. To make a demand, you first have to discuss how you've been harmed or injured and itemize your damages. Here, for example, are the kinds of damages you're likely to find in a personal injury case and a breach of contract dispute.
A response deadline. Give the recipient a firm date by which you want a response. You can't force them to respond, but a deadline makes clear that you won't wait forever.
The consequences of noncompliance. Tell them what you plan to do if they fail to respond, or if you're unable to reach a settlement. The key here is not to make threats you can't or won't back up. If you threaten to sue and don't, they'll quickly learn they don't need to take you seriously.

As you write, keep these thoughts in mind.

Be Polite and Businesslike

Don't attack or belittle your opponent, call them names, or make threats. Wildly emotional and overblown rhetoric won't make them more inclined to settle. Quite the opposite: Overheated accusations and demands will detract from the seriousness and merit of your claims, and invite the same kind of response.

Your demand letter is a type of business transaction, plain and simple. Treat it that way. You're writing to inform and persuade, not to anger or incite disagreement.

Make Sure You Can Prove It

Keep in mind that your opponent might demand proof of any factual or legal claims you make. Make sure you have evidence to back up your facts and damages. Best practice is to include that evidence as exhibits to your letter. If you make claims you can't prove and get called on them, you'll instantly lose credibility.

When you recite legal rules, be sure what you're saying accurately reflects the law. Your opponent (or their insurance company or lawyer) can do research too, and they'll be quick to pounce on any legal misrepresentations you make, even if they're accidental.

Ask for More Than You Want

When writing your letter, keep in mind the first rule of negotiation: Ask for more than what you're actually willing to accept. You'll negotiate downward from that point. As you do, your opponent will think they're scoring victories, which is what you want. Remember: Once settlement discussions start, you can't go back and ask for more than your opening demand.

So, how much negotiating room should you build into your demand? There's not a one-size-fits-all answer. Consider increasing your opening bid by 25% to 50%, but make sure your numbers are plausible and defensible. Asking for a million dollars to settle a case that's worth $10,000 will start talks off on the wrong foot. A bad start can doom hopes of settlement before you ever start talking.

How to Send Your Demand

In today's increasingly connected world, email is an accepted way of doing business. It's fine to send a settlement demand that way, if you have (or can get) your opponent's email address. But be safe: Double check that you have the correct address, and that you've typed it correctly in the address line before you hit "send." Ask the other side to acknowledge receipt of your letter.

If you're worried about proof of delivery, consider sending your demand by certified mail, and request a return receipt.

Mistakes to Avoid

You might not be a legal professional, but you don't want to come off looking like an amateur. You get just one chance to make a good first impression, so make it count. Here are some common, and easily avoidable, mistakes to avoid.

Make your letter look professional. Your demand should be typed, free of typographical errors, and written using proper grammar, sentence structure, and punctuation. Use headings and subheadings to organize your work and make it easier to read and follow. If you don't think you're a good writer, ask a friend or relative whose skills you trust to help you edit and clean up your work.
Don’t short sell your losses and damages. Your losses and damages are the engine that drives the value of your claims. Be certain to thoroughly discuss them, put values on them, and total them in a single, bottom-line demand. As mentioned above, make sure to include proof like medical records and bills, repair estimates or invoices, and other evidence that backs you up.
Tackle problems head on. If you know your claims have factual or legal problems, don't ignore them. For example, say you're sure your opponent is going to argue that you share part of the blame for what happened. Pretending it's not an issue won't make it go away. Explain why you weren't at fault, or if you were, why your share of the blame is minor or can be explained.
Keep your demands reasonable. As discussed above, don't overreach on your opening demand. It's a good idea to ask for more than you really expect to get, but your demand needs to be grounded in the facts and the law. Don't demand or threaten to ask the court for punitive damages or penalties in a breach of contract case or a straightforward injury case based on negligence. The law isn't on your side, and your opponent knows it (or likely will).

Sample Demand Letters

Here are two examples of demand letters. The first is a letter an unhappy customer might write to an auto repair shop. The second is a demand to a contractor who ruined a remodeling project.

Car Repair Letter


June 16, 20xx Tucker's Fix-It-Quick Garage 9938 Main Street Houston, TX 11111 Dear Mr. Tucker, On May 21, 20xx, I took my car to your garage for servicing. Shortly after picking it up the next day, the engine caught fire. Fortunately, I was able to douse the fire without injury. As a direct result of the engine fire, I paid the ABC Garage $1,281 for necessary repair work. ABC told me that your failure to connect the fuel line to the fuel injector properly caused the fire. I enclose a copy of their invoice. Also, I was without my car for three days and had to rent a car to get to work. I enclose a copy of an invoice showing the rental cost of $145. In a recent phone conversation, you claimed that the fire wasn't the result of your negligence and would have happened anyway. And you said that even if it was your fault, I should have brought my car back to your garage so you could have fixed it at a lower cost. As to the first issue, Peter Klein of the ABC Garage is prepared to testify in court that the fire occurred because the fuel line wasn’t correctly connected to the fuel injector, the exact part of the car you were working on. Second, I had no obligation to return the vehicle to you for further repair. I had the damage you caused repaired at a commercially reasonable price and am prepared to prove this by presenting several higher estimates by other garages. Please send me a check or money order for $1,426 on or before July 15. If I don't receive payment by that date, I'll promptly file this case in small claims court. After obtaining a money judgment, I will use all legal avenues to collect it. It also will be part of the public record available to credit agencies. You can reach me during the day at 555-555-2857 or in the evenings until 10 p.m. at 555-555-8967. Sincerely, Marsha Rizzoli

June 16, 20xx Tucker's Fix-It-Quick Garage 9938 Main Street Houston, TX 11111 Dear Mr. Tucker, On May 21, 20xx, I took my car to your garage for servicing. Shortly after picking it up the next day, the engine caught fire. Fortunately, I was able to douse the fire without injury. As a direct result of the engine fire, I paid the ABC Garage $1,281 for necessary repair work. ABC told me that your failure to connect the fuel line to the fuel injector properly caused the fire. I enclose a copy of their invoice. Also, I was without my car for three days and had to rent a car to get to work. I enclose a copy of an invoice showing the rental cost of $145. In a recent phone conversation, you claimed that the fire wasn't the result of your negligence and would have happened anyway. And you said that even if it was your fault, I should have brought my car back to your garage so you could have fixed it at a lower cost. As to the first issue, Peter Klein of the ABC Garage is prepared to testify in court that the fire occurred because the fuel line wasn’t correctly connected to the fuel injector, the exact part of the car you were working on. Second, I had no obligation to return the vehicle to you for further repair. I had the damage you caused repaired at a commercially reasonable price and am prepared to prove this by presenting several higher estimates by other garages. Please send me a check or money order for $1,426 on or before July 15. If I don't receive payment by that date, I'll promptly file this case in small claims court. After obtaining a money judgment, I will use all legal avenues to collect it. It also will be part of the public record available to credit agencies. You can reach me during the day at 555-555-2857 or in the evenings until 10 p.m. at 555-555-8967. Sincerely, Marsha Rizzoli

Home Contractor Letter


June 20, 20xx Beyond Repair Construction 10 Delaney Avenue Seattle, WA 55555 Dear Sirs: You recently did replacement tile work as a part of a remodeling project on my downstairs bathroom at 142 West Pine Street. Per our written agreement dated May 17, 20xx, I paid you $4,175 to complete the job. Problems with your work surfaced two weeks later when, on June 1, the tile in the north portion of the shower had sunk almost half an inch. Water pools in the corner because of the uneven shower floor, causing slow drainage. Because I didn't receive the remodeling job I paid for and you refuse to fix the problem, I must hire someone else to repair the shower. I demand that you pay the necessary costs. Enclosed is an invoice from ABC Tile in the amount of $1,200, the cost to correctly level the shower floor. Please send full the payment of $1,200 within ten days. If I don't receive the funds by July 1, 20xx, I'll file a lawsuit in small claims court. Sincerely, Ben Price

June 20, 20xx Beyond Repair Construction 10 Delaney Avenue Seattle, WA 55555 Dear Sirs: You recently did replacement tile work as a part of a remodeling project on my downstairs bathroom at 142 West Pine Street. Per our written agreement dated May 17, 20xx, I paid you $4,175 to complete the job. Problems with your work surfaced two weeks later when, on June 1, the tile in the north portion of the shower had sunk almost half an inch. Water pools in the corner because of the uneven shower floor, causing slow drainage. Because I didn't receive the remodeling job I paid for and you refuse to fix the problem, I must hire someone else to repair the shower. I demand that you pay the necessary costs. Enclosed is an invoice from ABC Tile in the amount of $1,200, the cost to correctly level the shower floor. Please send full the payment of $1,200 within ten days. If I don't receive the funds by July 1, 20xx, I'll file a lawsuit in small claims court. Sincerely, Ben Price

We've got lots of other sample letters you might find helpful, including demands for:

vehicle damage after an accident
injuries in a car wreck where fault is disputed
a car accident that caused serious injuries, and
injuries resulting from a motorcycle accident.

Additional Help

Need a hand with your settlement demand? Don't be shy about asking an experienced lawyer for help. This is someone who knows how to write demand letters, and can help you organize yours and put your best foot forward for settlement talks. They also know how to value your injuries and damages to give you the best chance at a fair outcome.

If your demand doesn't end in a settlement, find out when you should sue in small claims court. For more help preparing a small claims case, see Everybody's Guide to Small Claims Court, by attorney Cara O’Neill (Nolo).