4 Tips for Drafting an Effective Settlement Demand Letter

The following is a guest blog post by Anderson Franco, who practices landlord-tenant, personal injury, and general litigation throughout the Bay Area.

Before filing a lawsuit, a plaintiff should always consider whether to try for settlement. If settlement is the goal, then a settlement demand letter becomes a key negotiation tool. A settlement demand letter explains to the opposing party why they should pay money to settle the case immediately rather than litigating through the court system.

An effective settlement demand letter can obtain favorable resolutions early in a case. But what makes it effective? Here are four tips for drafting a powerful demand letter.

  1. Explain liability in simple terms. Claims settle when one party recognizes they’re legally liable for the damages alleged by the injured party. So, in simple terms, a settlement demand letter should explain why the opposing party is legally responsible. This requires identifying the applicable law(s) and explaining how the law applies to the facts at issue. The letter should use plain language to explain the relevant law and why it applies to your case. For example, if there is a San Francisco Rent Ordinance at issue, then identify the specific ordinance and explain why it applies to your situation. Particularly identify what was violated in the ordinance.
  2. Explain how you calculated the damages. Ultimately, a settlement demand should ask for a specific dollar amount to settle all of your claims. But the amount of money demanded is only persuasive if you explain how it was calculated. The settlement demand should always outline the damage calculation, at least in general terms. For example, if the settlement demand letter involves personal injury damages, then the letter should identify the recoverable costs by categories; if there are damage claims for wage loss, medical costs, and emotional distress, include a dollar figure for each category. Itemizing the calculations makes a more persuasive settlement demand letter.
  3. Provide supporting evidence when available. Support key allegations with evidence whenever possible. Supporting evidence makes your allegations stronger, because it assures the opposing party that your allegations are truthful. For example, in landlord-tenant habitability cases, copies of the lease agreement, letters demanding repairs, or photographs may be helpful. In car accident cases, include copies of the police incident report, photographs, or medical records.
  4. Keep it succinct and straightforward. The most effective demand letters succinctly summarize the facts and arguments. Lengthy letters distract the opposing party and risk losing their attention. Avoid the tendency to include too much detail about the incidents and damages. Instead, stick to the key facts that prove your case, particularly liability and damages.

There are many different styles for drafting settlement demand letters, but these four tips will make any letter more effective. Get sample demand letters for various types of cases in CEB’s California Tort Guide. And for guidance on negotiation and case settlement generally, turn to CEB’s California Civil Procedure Before Trial, chap 46.

Other CEBblog™ posts you may find useful:

© The Regents of the University of California, 2019. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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