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Received a Letter Before Claim?

Do not ignore it. Do not answer it in a rush either.

A Letter Before Claim is often the point at which an argument becomes a legal dispute.

The response matters. It can define the issues, affect what evidence is exchanged, open or close settlement opportunities and become important if proceedings follow.

What to do first

1.Note the deadline.
2.Preserve the relevant documents and messages.
3.Find the contract or other documents on which the claim is based.
4.Do not delete material because it appears unhelpful.
5.Avoid sending a substantive response before the allegations and evidence have been considered.
6.Identify anything genuinely urgent.
7.Check whether an insurer, existing adviser or other person needs to be notified.

What a response may need to address

Depending on the claim, that may include:

which allegations are admitted and denied;
the factual chronology;
the contractual or legal basis of the response;
relevant documents;
disputed losses;
any counterclaim;
information required from the claimant;
settlement;
ADR; and
what should happen next.

Pre-action conduct

The precise requirements depend on the type of claim.

Where a specific Pre-Action Protocol applies, that protocol needs to be considered. Where none applies, the Practice Direction on Pre-Action Conduct and Protocols generally expects parties to exchange enough information to understand each other's position, make informed decisions, consider settlement and ADR and narrow the issues before proceedings.

Thinking of sending a Letter Before Claim?

The same care applies before making a claim.

A Letter Before Claim should be based on a properly analysed case. It should explain the claim clearly and identify the important facts and remedy sought.

An aggressive letter which overstates the case can be counterproductive.

Questions I am often asked about Letters Before Claim

Ignoring it is rarely the right response. A Letter Before Claim is usually a formal step before proceedings are issued. Failing to respond, or responding inadequately, can affect the court's view of how the dispute was conducted and may have costs consequences.

Where a specific Pre-Action Protocol applies, there are defined expectations about how each party should respond. Even where no protocol applies, the Practice Direction on Pre-Action Conduct and Protocols expects parties to exchange information and consider settlement before proceedings.

The deadline should be noted and, if more time is needed to investigate the position properly, a holding response should be sent promptly.

The applicable requirements depend on the claim. The Debt Claims Protocol generally applies to a business claiming a debt from an individual, including a sole trader, and normally allows at least 30 days to reply. Requests for documents or debt advice can trigger further steps and waiting periods.

Under the Professional Negligence Protocol, acknowledgement is normally due within 21 days, followed by three months from acknowledgement to investigate and respond.

Where no specific protocol applies, the general Pre-Action Conduct Practice Direction ordinarily allows 14 days for a straightforward matter and no more than three months for a very complex one.

Check the applicable protocol, the letter and any relevant agreement rather than assuming one universal deadline.

Important: pre-action correspondence, a holding response and settlement discussions do not themselves stop time running for limitation purposes. If a limitation deadline is approaching, protective court steps must be handled by the client personally where permitted or an appropriately authorised practitioner.

If you have a claim against the other party arising from the same facts or relationship, the pre-action stage is a sensible point to explain it in correspondence.

Identifying a potential counterclaim early can affect the dynamics of the dispute, the settlement discussions and the costs position if proceedings follow.

However, explaining a proposed counterclaim in a pre-action letter is different from formally issuing or pleading a counterclaim in court. A reply letter does not itself bring a court counterclaim. If proceedings are issued, a counterclaim must be properly pleaded in the appropriate court document.

The counterclaim should be properly analysed before it is raised in correspondence. An overstated or poorly evidenced counterclaim can undermine the credibility of the response as a whole.

No. A response which denies the claim, sets out the factual position and identifies the relevant documents does not amount to an admission.

The response should be careful about what it concedes, but a well-drafted denial is not an admission. The purpose of the pre-action exchange is to allow each party to understand the other's position before proceedings are issued.

Settlement at the pre-action stage can be the most cost-effective outcome for both sides. The courts expect parties to consider it, and a party which unreasonably refuses to engage with settlement or ADR may face costs consequences later.

That does not mean accepting an unreasonable offer. It means engaging with the process in good faith and from an informed position.

A settlement reached before proceedings are issued avoids the cost, delay and uncertainty of litigation. Whether it makes sense depends on the strength of the respective positions and what each side actually wants.