A well-crafted demand letter is often the difference between resolving a dispute quickly and being forced into costly litigation. For small and mid-size businesses, adopting the mindset of a General Counsel (GC) when drafting demand letters can save time, protect relationships, and strengthen negotiating leverage. This playbook outlines how to approach demand letters with professionalism, clarity, and legal precision.

Before putting pen to paper, define the objective of your letter. Are you seeking payment, performance, or simply to preserve your rights? A GC-style approach requires aligning the tone and content of your letter with your desired outcome. Too aggressive and you risk escalation; too soft and your demand may be ignored.

Effective demand letters are grounded in clear, verifiable facts. Begin by laying out the background of the dispute in chronological order. Identify key dates, amounts owed, and relevant contract provisions. Avoid exaggeration—precision builds credibility and positions your business as reasonable and prepared.

• Reference the specific contract, invoice, or agreement at issue.
• Attach supporting documents as exhibits.
• Summarize any prior attempts to resolve the matter.

A GC knows the importance of clarity. State exactly what you want—whether that’s a dollar amount, a specific action, or the cessation of certain conduct. Include a firm deadline for compliance. Ambiguity weakens your position and invites delay.

Demand letters that sound overly hostile can backfire, while those that are too lenient may be dismissed. A GC-style letter is firm, professional, and unemotional. It communicates strength without closing the door to resolution.

• Avoid inflammatory language or threats.
• Use concise, businesslike phrasing.
• Signal openness to settlement or negotiation where appropriate.

Your letter should not only demand relief but also preserve your company’s legal options. Include a statement reserving all rights and remedies under law and contract. This ensures you are not seen as waiving claims if the matter proceeds further.

One of the most powerful functions of a demand letter is signaling readiness for litigation without actually filing suit. References to the strength of your legal position, supporting evidence, or potential damages can encourage compliance. However, balance this with a pathway to resolution to avoid unnecessary escalation.

While each situation is unique, most effective demand letters contain the following sections:

• Introduction: Identify the parties and purpose of the letter.
• Background: Summarize relevant facts and history.
• Legal Basis: Cite contract terms, statutes, or obligations.
• Demand: Clearly state what you seek and by when.
• Next Steps: Indicate consequences of non-compliance.
• Reservation of Rights: Preserve all legal remedies.

For small and mid-size businesses, demand letters are a powerful and cost-effective legal tool. By approaching them with a GC’s mindset—strategic, fact-driven, and professional—you increase your chances of resolution without litigation while demonstrating that your company is prepared to defend its rights. The right letter, at the right time, can move the needle and protect your business interests.

If your company is considering issuing a demand letter or responding to one, consulting with experienced legal counsel can ensure your interests are protected and your strategy is aligned with your business goals.