Demand Letter Cost

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What does a demand letter cost? Parties who are involved in a dispute often ask this question. Let’s explore costs associated with drafting and reviewing legal documents as well as some general information about demand letters.

How Much Does a Demand Letter Cost?

A demand letter is a formal legal document that is sent from one party to another party in an attempt to resolve a legal dispute. Demand letters are used to request action of the opposing party whether it is paying a debt or following through with a different type of contractual obligation. It is common to see demand letters used in breach of contract situations.

Demand letters are sent to a party as a last resort to settle a dispute before legal action is taken. For this reason, the party sending the demand letter typically hires a lawyer to draft the demand letter because if the demand is not met, they will need representation for pursuing a legal action.

Based on ContractsCounsel’s marketplace data, the average cost of a demand letter lawyer is $305.

Do Demand Letters Work?

Whether a demand letter resolves a dispute depends on the parties and the situation. A formal demand letter will show the opposing party that you are serious about the dispute and willing to take legal action. This could prompt the opposing party to rectify the grievance to avoid costly litigation.

On the other hand, if the opposing party believes that they have not done anything wrong, they may not comply with the demand letter. Instead, they will reply with a letter denying the claims.

If the opposing party denies the claims in the demand letter and refuses to make restitution, the sender of the demand letter can bring a lawsuit in court to settle the dispute.

What is Included in a Demand Letter?

Demand letters are almost always written by business lawyers and sent on behalf of a client. The contents of the letter will vary based on the dispute and the parties involved but most demand letters will include the following pertinent information:

  • The date and time of the grievance. The party sending the letter must inform the recipient the reason for the letter. Disputes are commonly over breaches of contractual obligations. The letter should detail the date, time, and circumstances under which the breach occurred.
  • The damages suffered. The sending party should clearly state how the actions of the recipient damaged them. Damages could be financial or related to the completion of a service.
  • A demand for restitution. The point of the demand letter is to give the recipient a chance to resolve the dispute. The sending party must clearly state what action they wish the recipient to take to rectify the situation.
  • A deadline to meet the demands. The deadline should be a reasonable amount of time for the recipient to meet the demands within the letter.
  • Applicable law. The attorney drafting the demand letter may incorporate applicable law that applies to the dispute. This will help the recipient understand why they are receiving the letter and warn them that there is most likely a valid case for a lawsuit should the recipient choose to not comply with the letter’s demands.
  • Consequences for not meeting the specified deadline. Most often, the consequences for not meeting the demands in the letter by the deadline is the filing of a lawsuit. A lawsuit will bring the dispute to court to be resolved by a judge or jury.

Demand Letter Projects

Demand Letter Drafting

A party who needs a demand letter will often hire an attorney to draft the letter. When the letter comes from a law firm rather than from an individual, it is more official. The recipient will know that the sending party is serious about their demands and prepared to take legal action. An attorneys will include pertinent laws that apply to the dispute to show the recipient that there is a valid legal claim.

Before drafting the demand letter, the lawyer will consult with their client to understand the details of the dispute and the kind of restitution the client is seeking.

After an initial draft, there may be more consultations to make any revisions and ensure that the demand letter includes everything that the party needs to be successful.

Demand Letter Review

In some cases, a party may want to draft their own demand letter. While there is nothing wrong with this, it is suggested to have a lawyer at least review the letter before it is sent to the opposing party.

If the letter isn’t professionally written or doesn’t contain all necessary information, it could be ineffective. If the case proceeds to trial, a demand letter can often be used to show the court that the party made good faith efforts to resolve the dispute. If the demand letter is unprofessional or missing information, it won’t be helpful in court.

You may also receive a demand letter from another party that you want a lawyer to review. Demand letters are fairly common in the course of every day business, so this comes up a lot.

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Demand Letter Drafting Cost

Hiring a lawyer to draft a demand letter will incur fees because it requires the time of a licensed attorney to complete the task.

ContractsCounsel’s marketplace data shows the average demand letter costs to be $305 across all states and industries.

Demand Letter Review Cost

Lawyers typically charge less for reviewing documents then for an entire drafting project, but even reviewing a demand letter will incur legal fees. An attorney will take the time to consult with the party, review the letter, and make edits.

ContractsCounsel’s marketplace data shows the demand letter review cost to be $305 across all states and industries.

How Do Lawyers Charge for a Demand Letter?

The two most common ways that lawyers charge for their time are hourly rates or flat fee rates.

Hourly Rates for Demand Letters

When a lawyer uses an hourly rate fee structure, they set an hourly rate for their time and then charge a client each hour spent working on a project or case. The lawyer can also bill for any of their employee’s time spent on the project like associate lawyers or paralegals. Hourly fee agreements ensure that lawyers are compensated for all time spent working on a particular case.

ContractsCounsel’s marketplace data shows the average hourly rate for a contract lawyer range from $250 - $350 per hour.

Flat Fee Rates for Demand Letters

If a lawyer is hired for a specific project like drafting a demand letter, instead of billing hourly, they may just quote a flat fee rate. After reviewing the project, the lawyer will estimate the amount of time it will take then quote the client a flat rate to be paid upfront.

Flat fee rates usually only cover specific tasks like drafting documents and review. If the client wishes to have consultations, communications, or ongoing representation, the lawyer may charge more.

ContractsCounsel’s marketplace data shows the average flat fee rate for a demand letter to be $305.

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