When a demand letter arrives: the clock, the records, the seven first-week mistakes, and who to call

What it is

A demand letter states a claim (what you allegedly did and which law it breaks), a demand (money, an action, or both), and a deadline. It may come from a lawyer, from a company that pursues claims, or from the person directly. The deadline is the sender's, not a court's. Missing it has no legal consequence by itself; it is what the sender does afterwards that matters. Most letters are followed by one of three things: negotiation, a lawsuit, or silence. Which one depends partly on the sender and partly on you. The letter a small business most often opens is the TCPA demand letter; Lesson 8 takes that one apart.

Read it for four things

1. Who sent it. The entity name, address and any case or matter reference. Check the entity in its state's business registry and, if a lawyer signed it, the state bar directory.
2. What specifically. Dates, amounts, names, a product, a URL, a phone number. Specifics mean the sender has records. A letter with no specifics is weaker and may be a fishing exercise.
3. The number and how it was reached. A statutory amount per violation, a licensing fee, unpaid wages, a contract sum. The method tells you what the claim is really worth.
4. The deadline and what is asked by then. Payment, a response, a stop, a document.

Preserve first

The letter is the point at which a court will later say you should have known litigation was likely. From that point, deleting or altering related records can be treated as destroying evidence, with serious consequences in any lawsuit. Suspend automatic deletion on the relevant systems, tell staff in writing not to discard anything, and collect what you have: contracts, emails, logs, invoices, consent records, photographs, whatever the claim is about. Lesson 9 explains why this matters so much.

The seven first-week mistakes

1. Ignoring it. Silence does not make a documented claim go away. It removes the discount the sender offered for resolving early and, for some statutes, is evidence that later conduct was willful.
2. Calling the sender angry. Anything you say can be written down and used. Respond in writing, after you have read your own records.
3. Deleting records. See above. It is the one mistake that cannot be fixed.
4. Posting about it. A social media post or a review-site reply about the letter is discoverable, often defamatory, and sometimes a separate claim.
5. Paying without a release. Money sent without a signed agreement releasing the claim buys nothing. The claim is still open.
6. Forwarding it with commentary. Emails to staff or partners saying "we probably did do this" are evidence. Forward the letter to the people who need it with no commentary and discuss it by phone or with counsel.
7. Admitting things in a reply. A written response can acknowledge receipt, ask for the sender's evidence, state your position, and request an extension. It should not narrate your business practices or concede facts you have not verified.

Who to call

• Your insurer, if there is any chance the claim is covered. Notify promptly; let them decline in writing if they are going to. Late notice is the easiest reason for a refusal, as how your business is exposed explained.
• A lawyer in the relevant field, when the amount would hurt, the claim involves a lawsuit threat with class language, a government agency, or a question you cannot answer from your own records. Ask for a flat fee for the review and the first response. Your state bar's referral service can point you to one.
• Your accountant, before any payment, on how it should run and be recorded.
• The vendor, if a vendor's conduct caused the claim. Tender it in writing and invoke any indemnity.

What a written response contains

The matter reference. Confirmation of receipt and the date. A request for the sender's evidence for anything the letter asserts without documents. Your position, stated briefly and only where you are sure. A request for a written extension if you need one. A statement that you reserve all rights. Nothing else. A short, correct response sent before the deadline is worth more than a long one sent after.