You've been injured in an accident and have hired a personal injury attorney. Before filing a lawsuit in court, the attorney tells you she will first send a demand letter to the other side. Let's look at the role this letter plays in the personal injury settlement process, and what goes into the letter itself.
The Role of the Demand Letter
In general, personal injury attorneys pay close attention to the amount of time they spend on a particular case, and seek to use that time as wisely as possible. The goal here is to most effectively serve the client, but efficiency is also optimal because a personal injury attorney's fee is typically a percentage of the amount recovered. The more time the attorney spends on a case, the less they earn per hour. So it is in the financial interest of personal injury attorneys to settle claims without engaging in time-consuming litigation, whenever possible. (Learn more about contingency fee agreements in personal injury cases.)
The most common way personal injury attorneys settle claims without litigation is to initiate a dialogue with the responsible party's insurance company (or their attorney) by drafting and sending a "demand letter." This letter puts the other side on notice of your claim and affords it the opportunity to settle before a costly and time consuming personal injury lawsuit is filed.
When is the Demand Letter Typically Sent?
Once the attorney has concluded her investigation of your personal injury claim and has all of the relevant information concerning your "damages" -- including medical treatment, lost wages, and "pain and suffering"-- and the other side's role in causing those damages, it's usually time to send the letter. At that point, the scope and severity of your injuries are understood, and a compelling argument for the other side's responsibility for the underlying accident has been established.
What's In a Personal Injury Demand Letter?
A well-crafted personal injury demand letter should:
- clearly state that it is presented for settlement purposes only
- provide an objective, verifiable account of the incident that led to the claimant's injuries
- explain why the other side is responsible for the claimant's injuries and why the claimant is free of responsibility
- provide a detailed, verifiable explanation of the claimant's injuries
- itemize all of the claimant's medical expenses, out of pocket expenses and lost wages
- address the specifics of the claimant's pain, suffering, and emotional distress
- include any known witness statements and the names of all known witnesses, medical providers and employers who will provide support for the claimant's damage claims
- contain a settlement demand for the specific amount of money the claimant is seeking to settle the claim, and
- request a response to the demand within a reasonable time (30 days, for example).
The Impact of a Demand Letter
When an insurance company receives a well-crafted demand letter that includes the information listed above, it will typically treat the claim in a serious manner, and will embark upon its own investigation. At this point, the insurer's goal is to respond to the demand with some sort of counter-offer. Just as the claimant's attorney is interested in settling the claim without having to file suit, the insurance company is likewise concerned about attorney fees and other litigation costs that can cause a claim to become prohibitively expensive. For this reason, insurance companies will seize the opportunity to negotiate a pre-suit settlement whenever it is presented.
A well-crafted demand letter serves as the catalyst for negotiation and ultimate settlement of a personal injury claim. When this letter documents the facts supporting the elements of the claim, it is an effective tool in the personal injury attorney's arsenal and often leads to a timely, cost effective resolution.