Draft Your Letter Before Action

Litigation is intended to be a last resort, so before you lodge proceedings against someone you should always have given them notice that you intend to litigate. This notice is called a ‘letter before action’ and provides the other side with a last chance to pay up or settle a matter before you go to the small claims court.

A lot of people use a solicitor to draft this letter for them, which may cost them about £30. Some people feel that a letter from a solicitor is better than writing a letter themselves, and makes you seem more ‘serious’ about resolving the dispute. If you know how to draft a letter before action yourself then there is probably no need to pay a solicitor to do it.

What Your Letter Before Action Should Include

Your letter before action needs to spell out the following information:

• Their reference number relating to any correspondence as well as yours
• The date, clearly marked at the top of the letter
• What you are claiming for. If it is a specific amount of money, put this at the top of the letter. For example: “Balance owed by you to Joe Bloggs of £500”. Directly underneath this you should then put “URGENT: NOTICE OF INTENDED LEGAL ACTION.”

What Do They Owe You?

In the first paragraph of your letter before action you need to refer to previous correspondence and your prior attempts to settle the matter before. If they have provided you with ‘excuses’ as to why they haven’t paid or admitted liability for the money, refer to these here. List the dates when you sent payment reminders, copy invoices, and any other documentation. Finish this paragraph with: “Despite repeated requests you have failed to pay the amount of (insert amount.)”

When Should Payment Be Received?

The next paragraph should say that the full amount of the debt is now due. Then look at your calendar and set a date by which full payment should be made, preferably in around two weeks time. It can help if you set your deadline for 4pm on a certain date, which gives adequate time for the post to have come. The way to say this is: “Please be advised that if we do not receive payment in full by 4pm Friday 12th April then we will instruct our solicitors to prepare the matter for litigation by issuing a claim in the county court. If this is necessary you should be advised that will add court fees and interest at 8% per annum to the outstanding amount.”

What Will Happen If They Don’t Pay?

You should then explain the consequences of non-payment. “If you do not pay the amount once the claim is issued against you then we will request a county court judgment is recorded against you. This may affect your credit rating for up to six years. Please be advised that we will carry out any and all enforcement procedures necessary to recover the debt in these circumstances.”

The final paragraph gives them a last chance to pay. “In order to avoid the consequences of a county court judgment, and/or enforcement proceedings at a future date, you must arrange the immediate payment of the amount outstanding to us at the above address. Please quote the reference at the top of this letter and make the cheque payable to ‘Insert your name/business name.”

At the very bottom of the page, put this in bold: “Your attention to this matter is required promptly. Please be advised that no further notice will be given.”

What Happens Next?

Hopefully the person who owes you money will read the letter and pay up promptly, but if not you can lodge proceedings at the small claims court. Judges at the small claims court look more favourably at claimants who have exhausted all other options before resorting to litigation.