The letter before action, and what it actually buys you
Most disputes are settled by the quality of the first letter, not by the threat at the end of it.
Problems, in order · Part of Outsourced General Counsel
A letter before action has a formal job — it satisfies the pre-action requirements and sets a clock running — but that is not why it works. It works because it is the first time the other side sees, in one place, exactly what you know and exactly what you will do next. Most counterparties have not assembled that view of the matter themselves.
The letters that fail do two things. They overstate the claim, which invites a specific denial and hands the other side a reason to instruct lawyers of their own. And they lead with the threat rather than the facts, which tells the reader you are hoping to be paid off rather than expecting to be paid.
The letters that work set out the contractual basis, the sequence of events with dates, the loss with a figure, and a deadline that is short enough to be taken seriously and long enough to be reasonable. Then they stop.
There is also a cost point that founders consistently underestimate. Once both sides have instructed litigators, the cheapest available outcome usually rises above the value in dispute. Every week that a matter stays in correspondence is a week in which the settlement figure is still the number you want rather than the number the fees demand.
We do not conduct litigation. We do own the correspondence, and in the majority of matters that is where it ends.
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