A demand letter or a lawsuit just landed on your desk: what to do in the first ten days

The envelope you did not want to open

It comes by certified mail or by a process server at your front desk. A letter from a law firm you have never heard of, on behalf of a former partner, a customer, an ex-employee or a competitor, telling you that you owe money, that you breached a contract, that you are using a name you have no right to, or that you must stop doing something by a date two weeks away. Or it is a citation and a petition: you have been sued, and the document says you must answer by a deadline or risk a judgment against you.

Your first reaction is physical. Then comes the urge to call the other side and explain, or to write a long email setting the record straight, or to ignore it because the claims are ridiculous. I have represented businesses and individuals in disputes in Texas since 1995, on both sides, and I can tell you that each of those instincts tends to make the situation worse. The letter was written to provoke a reaction. The lawsuit has a clock attached that does not care how you feel about it.

This guide explains what a demand letter and a lawsuit each actually are, what to do and not do in the first days, how to decide whether you need a litigator, and how a dispute is worked from the first conversation toward a resolution. It is general information; the papers in your hand need a licensed attorney's eyes.

What the paper means, and what it does not

A demand letter is not a court filing. It is a lawyer's statement of a client's position, usually with a request for money or action and a deadline. It can be an opening negotiating position, a required step before certain claims can be filed, or a sincere attempt to resolve something without litigation. It may also contain claims that would not survive in court. What it does do is put you on notice, which has consequences: from that point you have an obligation to preserve relevant documents, and anything you say in response may be used later.

A lawsuit is different in kind. Once you are served with a petition, a deadline to file an answer begins to run, and if you miss it, the other side can ask the court for a default judgment, meaning they may win without you ever telling your side. The petition states claims, not proven facts; a plaintiff can allege almost anything at the start. But the deadline is real, and so is the need to respond in the correct form. A letter from you to the judge is not an answer.

• A demand letter is a position, not a ruling; the deadline in it is the sender's, not a court's
• A served lawsuit starts a court deadline to answer in the proper form
• Allegations in a petition are claims, not findings
• Both trigger a duty to preserve emails, texts, files and records
• Anything you say to the other side can be used later

What to do, and not do, in the first 48 hours

Read the entire document once, slowly, and note three things: who is making the claim, what they say happened, and every date in it. Put the response deadline on your calendar immediately and work backward from it. Then preserve everything. Do not delete emails or texts, do not clean up a shared drive, do not ask an employee to remove a post. Deleting material after you have notice of a dispute can be treated as destroying evidence, and that problem can become bigger than the original claim.

Gather the documents that relate to the relationship: the contract, the amendments, the invoices, the emails that led up to the falling-out, the employee file, the trademark registration. Write a private timeline for your attorney while it is fresh. Check your insurance policies, including general liability, professional liability and any employment practices or directors and officers coverage; some claims must be reported to the carrier promptly or coverage can be lost, and the carrier may provide a defense.

What not to do: do not contact the other party or their lawyer, do not post about it, do not discuss it with employees beyond what is necessary to preserve records, and do not sign anything the other side sends you, including a tolling agreement or a settlement, without counsel reading it first.

• Calendar the deadline and work backward from it
• Preserve every email, text, file and record; delete nothing
• Gather contracts, correspondence and the file for the relationship
• Write a private timeline for your attorney
• Review insurance policies and notify carriers where required
• Do not respond, post, or sign anything until counsel has reviewed it

When you can handle it yourself, and when you need a litigator

A small demand over an invoice, with no lawsuit filed and a counterparty you can still talk to, can sometimes be resolved with a careful business conversation, ideally after a short consultation so you know where the lines are. Everything else benefits from a litigator early, and the earlier the better. The first response to a demand letter often shapes the whole dispute, and the answer to a lawsuit has to be filed correctly and on time.

You need counsel without delay if you have been served, if the claim involves a non-compete, trade secrets, a trademark or fiduciary duties, if an employee or former employee is involved, if the amount at stake would hurt the business, if a partner or co-owner is on the other side, or if you want to make a demand yourself and need it to carry weight. I handle disputes for businesses and individuals across Dallas–Fort Worth in state and federal court, and the initial conversation is where most of the value is: understanding what you are actually facing.

How I work a dispute from the first call

The first meeting is about facts and goals. I read the letter or petition and the documents you gathered, and I ask what you want the outcome to be: your money back, the other side to stop, a clean exit from a partnership, or simply to make this go away at the lowest cost. Litigation is a tool for reaching a goal, not a goal itself. Then I give you a candid read: the strengths, the weaknesses, the likely paths and the rough cost of each.

If it is a demand letter, the response is drafted deliberately. Sometimes the right response is a firm letter that corrects the record and signals readiness to defend. Sometimes it is a counter-demand, or a call to opposing counsel before positions harden. If you have been served, the answer is filed on time, with the defenses and any counterclaims the facts support, and the case is scheduled. From there the work is discovery, which means exchanging documents and taking testimony, motions where they can narrow or end the case, and settlement discussions at the points where the other side's view of its case has changed.

Most disputes resolve before trial, through negotiation, mediation or arbitration if the contract requires it. I prepare every case as if it will be tried, because that is what produces settlement leverage. If trial is the right path to your goal, we try it.

• Facts, documents and your actual goal, defined in the first meeting
• Candid assessment of strengths, weaknesses and cost of each path
• Demand letters answered deliberately: correction, counter-demand or a call
• Lawsuit answered on time with defenses and any counterclaims
• Discovery, motions and settlement discussions at the right moments
• Mediation or arbitration where useful; trial where necessary
• You informed and deciding at every step

What drives the cost of a dispute

The largest driver is how far the case goes. A matter resolved by exchanging letters costs a fraction of one that goes through discovery, and discovery costs a fraction of trial. The second is the volume of documents and witnesses: a dispute over one contract and ten emails is a different case from one spanning years of a partnership. The third is the other side: an opponent who litigates to punish costs everyone more.

Complexity matters too: claims involving fiduciary duty, fraud, trade secrets or intellectual property require more analysis and often expert witnesses. Whether the contract has a fee-shifting clause, which can allow the winning side to recover attorney's fees, changes the calculus for both parties. I discuss fees openly at the start, I bill at Texas rates, and I revisit the cost-benefit with you as the case develops, because the right strategy at the beginning is not always the right one six months in.

How to choose a litigator

Hire someone who has represented both plaintiffs and defendants. A lawyer who has sat on the other side of your kind of case can anticipate what the opponent will do. Ask how much of their practice is litigation, as opposed to transactional work, and whether they have tried cases to verdict and handled arbitrations. Ask who will actually do the work and how you will be kept informed; a litigator who returns calls matters.

Ask how they think about settlement. Someone who promises to crush the other side is selling you a feeling. Someone who asks what outcome you want and then explains the realistic paths is practicing law. And confirm they are licensed in Texas and admitted to the federal courts here if your matter might end up in one.

• Experience on both sides of disputes like yours
• A practice centered on litigation, with trial and arbitration experience
• Clear about who does the work and how you are updated
• Talks about your goal and the paths to it, not about crushing anyone
• Licensed in Texas and admitted to the relevant federal courts
• Open about fees and willing to revisit strategy as the case develops

Mistakes that make a dispute longer and more expensive

The first is responding emotionally and in writing. The long email that sets the record straight becomes an exhibit, and it rarely says what a careful response would. The second is deleting anything. The third is missing the answer deadline because the claims seemed absurd; a default judgment on absurd claims is still a judgment. The fourth is not telling your attorney the bad facts. Every case has them, and the ones your lawyer learns from the other side are the expensive ones.

On the other side of the table, the mistake I see is sending a demand letter without being prepared to follow through, or filing a lawsuit for leverage with no plan for what comes after. A demand that is ignored and never pursued teaches the other side you will not act.

From your first call to a resolution

You send me the letter or the petition and whatever documents you have, and we schedule a conversation, in person at our downtown Dallas office or by phone. I read everything first. In our meeting I explain what the papers mean, what the deadlines are, what I see as the strengths and risks, and what the realistic options are, along with what each would cost. You decide how to proceed.

If you engage me, the immediate deadlines are handled, the preservation of evidence is formalized, and we set a strategy around your goal. You hear from me when something happens and before any decision is made. My aim is representation at the level you would expect in a major market, delivered at Texas pricing, and a resolution that gets you back to running your business or your life.

Questions people ask me