A letter before action is the first letter you send, usually through your business dispute solicitors, to the other side that you are in a dispute with. It sets out details of your complaint and puts the other party on notice that if they do not pay the outstanding sum, you will start legal proceedings.
Contents:
- What is a letter before action?
- Can a letter before action be used for any dispute?
- When is a letter before action sent?
- Is it a legal requirement to send a letter before action?
- What are the consequences of not sending a letter before action?
- Who typically sends a letter before action?
- What should you include in a letter before action?
- How should you send a letter before action?
- Responding to a letter before action
- What should you do if there is no response to a letter before action?
- What is the next stage after the letter before action?
- Summary
What is a letter before action?
A letter before action is sent before any formal legal action is started. A letter before action is a key part of the claims process. It does far more than give a brief overview of the facts; it must clearly explain your position and the legal basis of your claim. It should also detail the steps you require the recipient to take if they wish to avoid legal action. Those demands must align with the relief a Court would likely grant if your claim were to succeed. For example, the claim should be realistic and not seek something that a court would not ordinarily order.
Can a letter before action be used for any dispute?
A letter before action is often associated with debt claims, but letters before action can, and should, be used before issuing proceedings with any type of civil dispute, including intellectual property issues, breach of contract claims, and construction disputes.
The form of the letter before action and what it should include varies depending on the nature of the dispute. You should always seek legal support before sending any correspondence to a party with whom you have a legal dispute. Expert legal advice will ensure your letter complies with the guidelines and will prevent you from saying something that could jeopardise your position.
When is a letter before action sent?
Letters before action are always sent before you issue Court proceedings. The timing of the letter before action depends on the circumstances. For example, if you have tried and failed to resolve the issues directly with the other side, you might decide to escalate matters and send a formal letter before action. Sometimes, issues are so urgent that a letter before action is sent as soon as they arise so the sender can seek relief from the Court. For example, intellectual property owners often use injunctions to stop an infringer’s activities, so they may send a letter before action as soon as they are aware of an infringement.
Is it a legal requirement to send a letter before action?
Sending a letter before action is required under the Civil Procedure Rules (CPR). The CPR is a set of rules governing the conduct of parties to civil litigation. The rules include a series of ‘pre-action protocols’, detailing the steps the parties must take before litigation.
All pre-action protocols require that a letter before action be sent. Sometimes they are referred to as Letters of Claim. The aim of the letter before action, in conjunction with any other applicable pre-action conduct, is as follows:
- To enable the parties to understand each other’s position.
- To assist the parties in making decisions about how best to proceed.
- To allow the parties to consider alternative dispute resolution methods.
- To reduce the cost of disputes.
Specific pre-action protocols apply to certain types of claims, such as debt claims and construction disputes. If your case is not governed by one particular pre-action protocol, you must follow the general pre-action protocol.
What are the consequences of not sending a letter before action?
The Courts take a dim view of Claimants who start court proceedings before sending a letter before action without good cause as court action is supposed to be a last resort. Judges can impose a range of sanctions to address non-compliance, which include the following:
- Awarding a lower proportion of your costs
The usual litigation costs rule is that they ‘follow the event’. This means that if you win your claim, the Defendant will be ordered to pay a proportion of your legal costs. If you did not send a letter before action in advance of issuing your claim, the Judge may reduce the amount of costs the Defendant has to pay. - Ordering you to pay the other side’s legal costs even if you win your claim
Paying the other side’s costs on an indemnity basis significantly increases the paying party’s cost liability. Most successful litigants are awarded their costs on the ‘standard basis’. When assessing costs on a standard basis, a Judge will only allow those they consider reasonable, necessary and proportionate. The judge will resolve any doubt in favour of the paying party. Generally, a successful party awarded their costs on a standard basis can expect to recover around two-thirds of their overall costs.
Indemnity costs, on the other hand, are assessed in favour of the receiving party. The costs need only be reasonable; there is no proportionality requirement. If the Judge awards the Defendant their costs on an indemnity basis, you can expect to pay as much as 90% of their total costs bill. - Depriving you of interest on the money you receive
The Judge may penalise you for not sending a letter before action by awarding interest on the sums claimed at a lower rate than you may have otherwise received or by disallowing interest entirely. This will limit the amount you can recover. - Forcing you to halt the proceedings and comply with the pre-action protocol
If the Defendant raises your failure to send a letter before action with the Court early in the proceedings, the Court may order a stay until you have complied with the relevant pre-action protocol. Not only does this delay your claim, but it can also give the Defendant a significant tactical advantage.
Who typically sends a letter before action?
Solicitors usually send the letter before action. Whilst you can prepare and send the letter yourself, using an experienced dispute resolution solicitor has several key advantages, including the following:
- Your solicitor will be familiar with the requirements of the relevant pre-action protocol
Each pre-action protocol imposes different requirements on what you should include in your letter before action. Failing to provide all the relevant information can result in prolonged correspondence with the other side which, in turn, will increase your costs. - Your solicitor will be aware of any potential pitfalls
In some circumstances, a poorly drafted letter before action may cause difficulties for you. For example, if you threaten proceedings for trade mark infringement and it subsequently transpires that those threats were groundless, the recipient may issue a claim against you under the unjustified threats legislation. - Your solicitor will know what demands to make
The action you demand the recipient takes should mirror the relief you would be entitled to were you to win your case. Your dispute resolution solicitor will be familiar with the relief appropriate for different types of claims and will draft the demands accordingly. - Your letter will have a greater impact
Receiving a letter from a solicitor tends to have a greater impact than one sent by you. It indicates that you are serious about legal action and often encourages the recipient to engage with the issues.
Of course, using a solicitor to send a letter before action on your behalf involves incurring legal fees. Most Claimants consider it money well spent to increase the chances of a swift, cost-effective settlement and avoid making costly mistakes by doing it themselves.
What should you include in a letter before action?
Each pre-action protocol has its own requirements regarding the contents of a letter before action. As a minimum, it should include the following information:
- Who you are, your address, and your contact details.
- A summary of the facts.
- The legal basis of your claim.
- What you want from the recipient.
- If you are demanding money, how you have calculated the amount.
- The consequences of the recipient failing to comply with your demands.
- Copies of any relevant documentation.
How should you send a letter before action?
Some pre-action protocols are silent about how a letter before action should be sent, only requiring that a prospective Claimant sends one. Others, such as the pre-action protocol for debt claims, state that the letter should be posted. Even if no method of transmission is specified, it is important to remember that the purpose behind sending a letter before action is to bring the issue to the person’s attention. It is best practice to send the letter by post wherever possible. Whilst other methods of communication, such as email, may be used alongside post, you should not use them as a substitute due to the difficulties in knowing and proving that the recipient received the communication.
If you do not have an address for the other party, you should do all you can to get the letter to them. Sending it by email may be enough, or, if you know where they work or frequent, you might consider handing it to them. Your dispute resolution solicitor will advise on the best course of action.
Responding to a letter before action
Is it a legal requirement to respond to a letter before action?
The pre-action protocols govern the prospective Defendant’s conduct as well as that of the prospective Claimant. The protocols expect the recipient to respond within specified time limits/a reasonable time.
What happens if a letter before action is ignored?
If you ignore a letter before action, there is a very real risk that the next communication you receive will be a Claim Form notifying you that the other side is starting legal proceedings.
You may be ordered to pay the Claimant’s costs even if their claim fails, potentially on an indemnity basis. If the Claimant succeeds, interest on the sums awarded may be charged at a higher rate.
How long do recipients have to respond to a letter before action?
How long you have to respond to a letter before action depends on the pre-action protocol relevant to your dispute. For example, if no specific protocol applies, the general pre-action protocol states that you must reply within a ‘reasonable time’, which it anticipates being 14 days in straightforward cases and up to three months in very complex ones.
What if the recipient disputes the claims in the letter before action?
If you dispute the claims made in the letter before action, your response is your opportunity to set out your position and explain how the prospective Claimant’s case is flawed. A well-drafted reply detailing the facts of the matter from your perspective and the legal basis for your assertions may cause the prospective Claimant to think twice about embarking on litigation and encourage them to enter into settlement discussions. Sometimes, a robust response can defeat the Claimant’s allegations entirely.
How do recipients normally respond to a letter before action?
The pre-action protocols detail what the recipient of a letter before action should include in their response, and your dispute resolution solicitor will advise on the requirements in your case. For example, the general pre-action protocol states that the following information should be provided:
- Confirmation of whether you accept the claim.
- If you do not accept the claim, the reasons why.
- An explanation as to which facts and parts of the claim you dispute.
- Whether you intend to make a counterclaim and, if so, details of your counterclaim.
You should also include copies of any relevant documentation.
What should you do if there is no response to a letter before action?
If your letter before action is ignored, your solicitor will advise on the next steps, which will likely be Court proceedings. Proceedings can be time-consuming and costly, so they may recommend sending a chaser, giving the other party one final chance to respond before you start litigation. If you still don’t receive a response and issue a claim, your solicitor will bring the Defendant’s failure to respond to the letter before action to the Court’s attention and ask that the Defendant be penalised accordingly. This can result in a greater cost recovery and a higher interest rate being applied to any sums you are awarded.
What is the next stage after the letter before action?
Once you have sent a letter of claim and the other side has responded, you must follow the other steps in the relevant pre-action protocol before issuing a claim. Those steps may include disclosing documentation requested by the prospective Defendant and considering the use of alternative dispute resolution methods, such as mediation, to resolve the issue.
Summary
Letters before action play a vital role in the litigation process. Not only are they required by the Civil Procedure Rules, but the exchange of information also enables the parties to understand each other’s position and properly assess the merits of their own.
Most disputes are resolved before proceedings are issued, thanks largely to the parties’ compliance with the pre-action protocols and, in particular, a well-prepared letter before action. Instructing dispute resolution solicitors, like ours, to prepare the letter on your behalf will ensure it complies with the relevant pre-action protocol, robustly sets out your case, and gives you the best chance of achieving a quick, cost-effective resolution and avoiding litigation.
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