You’ve received a lawyer’s letter: what should a business do before responding?

A lawyer’s letter has a way of making even experienced business owners feel as though something dramatic has just happened. Sometimes it has. Sometimes it has not.

The first thing I would do is verify that the firm is genuine and understand who has actually sent the letter. A letter on legal letterhead can look intimidating, but that does not tell you whether the claim is strong, weak, routine, speculative or even correctly directed at your business.

There are perfectly legitimate firms, for example, that send large volumes of demands concerning alleged unauthorised use of photographs or other intellectual property on business websites. The fact that the firm is real does not mean the demand should simply be paid. You still need to understand what is being alleged, what evidence supports it and whether the claim is properly made against you. The same principle applies more broadly: verify the sender, then verify the claim.

Work out what actually happened

Once you know the letter is genuine, do not immediately start drafting a response. First work out what the dispute is about and what records the business already holds. Do you recognise the incident? If it concerns an unpaid invoice, do you have the contract, order, invoice, delivery records or evidence that the service was completed? If it concerns an accident or injury, are there photographs, witnesses, incident reports, CCTV, maintenance records or relevant health and safety documentation? If it is contractual, what do the agreement and earlier correspondence actually say?

The aim is to understand the factual position before committing the business to a legal one. Relevant evidence should be preserved as soon as a dispute is reasonably anticipated, which may be well before a lawyer becomes involved. If that has not already happened, do it now. Secure materially relevant emails, CCTV, call recordings, contracts, invoices, system records, incident reports and any applicable RIDDOR documentation so that they cannot be deleted, overwritten or altered.

Where witnesses are involved, it may also be sensible to obtain factual accounts while memories are still reasonably fresh. The point is not to coach anyone or construct a defence. It is to preserve what people actually remember before time, discussion and hindsight change the picture.

Know when to stop handling it yourself

If the business recognises the dispute and the potential exposure is significant, that is often the point to take professional advice before saying anything substantive. Businesses can make their position considerably worse by trying to answer everything immediately. They become defensive, make unnecessary admissions or commit themselves to a version of events before the documents have been properly reviewed. The opposite mistake is ignoring the letter altogether.

A lawyer’s letter is not proof that the claim is valid, and it is not the same thing as court proceedings. Even a formal Letter of Claim is not itself a court judgment or order. If a claim form, particulars of claim or other court document has actually been served, however, procedural deadlines may already be running and the position needs immediate attention.

In many cases, the sensible immediate response to correspondence is simply to acknowledge receipt, state that advice is being taken and, where appropriate, request a reasonable extension without addressing the merits.

The deadline itself also needs to be understood. Some dates are simply chosen by the lawyer. Others arise under a formal pre-action protocol or the general pre-action rules and may have consequences later if ignored. Court deadlines are different again. Once proceedings have been issued and served, missing a deadline for acknowledging or defending a claim can have much more immediate consequences, including the possibility of default judgment. Statutory limitation periods are another separate issue, and correspondence before proceedings does not normally stop the limitation clock.

The practical question is therefore not simply, “When do they want a response?” It is: why does that deadline apply, and what happens if we miss it?

If insurance may be relevant, check the policy and notify the insurer early. Ideally that should happen before admitting liability, making an offer or entering substantive correspondence, because some policies give the insurer significant control over how the claim is handled.

Control what is said, internally and externally

How widely the letter should be circulated depends on the dispute, but where there is significant legal, financial or reputational risk, the starting point should usually be need-to-know. A serious claim is not the moment for speculative email chains, informal explanations or office gossip. Keep the people who genuinely need to know involved and avoid creating unnecessary commentary which may later become part of the evidential picture.

The same applies externally. If the dispute could attract press attention or materially affect the organisation’s reputation, communications should be controlled through whoever is managing the issue, whether that is a lawyer, designated senior person, communications adviser or press officer. The business should not have several people giving slightly different versions of events.

Do not say more than you need to

One of the most common mistakes businesses make is believing that a strong response must be a long one. It does not. A detailed rebuttal is not always useful at the outset, and sometimes the proportionate response is simply to dispute the allegation, request evidence or confirm that the matter is being reviewed.

A relatively speculative demand, such as a routine claim concerning an image on a website, may need little more than a short factual response initially. There is rarely much value in volunteering a detailed defence before you know whether one is actually required.

Other disputes can look routine but carry much greater consequences. A contractual demand may involve long-term obligations, substantial fees or termination provisions which are not obvious from the first letter. In those circumstances, trying to save money by handling the matter internally can become considerably more expensive than obtaining advice early. The first response should protect the business’s options, not close them down.

Think commercially, not emotionally

Sometimes the commercially sensible answer is to settle. There is little value in spending several thousand pounds on advice and litigation to defend a claim which could be resolved for substantially less, particularly once management time, disruption and reputational risk are taken into account.

That does not mean paying every demand. The merits still matter, as does the risk of creating a precedent. Where appropriate, settlement terms should deal with confidentiality and finality so that resolving one dispute does not unnecessarily encourage another.

Sometimes settlement is not possible. The other side may refuse to compromise or the business may be unable to accept what is being demanded, in which case court proceedings may ultimately be unavoidable. Even winning does not necessarily mean recovering everything spent on lawyers. In England and Wales, recoverable costs are particularly restricted on the small claims track. Although there are exceptions, including certain court fees, expenses and costs arising from unreasonable conduct, a successful party will not ordinarily recover all of the legal fees it has chosen to incur. The economics of litigation therefore need to be considered alongside the legal merits.

The important thing is not to let the tone of the lawyer’s letter dictate the response. A strongly worded demand can still be weak. A polite letter can still carry substantial risk.

The useful questions are more practical: is the firm genuine, what is actually being alleged, what evidence do we have, what is the business’s real exposure, what needs preserving, who needs to know, what deadlines genuinely matter, and what response protects the business without saying more than necessary?

Aubrey International supports businesses with disputes, formal correspondence and commercial risk where an independent review or carefully managed response is needed.

Practical support. Real solutions.