I have received a letter of claim. What do I need to do?

What is a letter of claim?

A “letter of claim” (sometimes known as a “letter before action”) is a letter putting a person on notice that Court proceedings may be bought against them. These days the Courts take the view that litigation should be a last resort and, therefore, parties are encouraged to resolve their disputes at an early stage by communicating with each other, providing information and documentation to each other and considering alternative dispute resolution procedures.

What action should I take?

Involvement of insurers

If you have insurance in relation to the type of claim in question, for example, if it is a claim arising out of a road traffic accident and you have motor insurance, you should notify your insurers without delay. Insurance policies generally set out time limits for the notification of claims and if, therefore, notification is made late your insurer may not cover you. 

Many types of claims are covered by legal expenses insurance. Legal expenses insurance policies do not cover any compensation which may be payable to a Claimant but they may cover your own legal costs and those of the Claimant. Legal expenses insurance is often sold as an add-on to household and motor insurance. If you think that you may have legal expenses insurance you should notify your legal expenses insurers without delay. Again there are generally time limits for the notification of claims.  

If you are insured your insurer may take over conduct of the matter or refer it to solicitors to act on their behalf.

Involvement of solicitors

The question as to whether solicitors should be instructed at this stage will largely depend upon the complexity of the case. It is generally advisable to instruct Solicitors if the matter is of great importance (for example, where there is a risk of a person losing their home or being made bankrupt) or if the claim is of a high value (i.e. one which would be allocated to the Fast Track or the Multi-Track if Court proceedings are commenced).  

Where legal expenses cover is available insurers generally exclude cover for any work carried out by a solicitor prior to the acceptance by them of the claim. Generally legal expenses insurers will wish to appoint their own solicitors to deal with the matter.  

If you decide not to involve solicitors it may be beneficial to seek advice from the Citizen’s Advice Bureau or from a local Law Centre.

The Pre-Action Protocols

Certain types of claims are subject to Pre-Action Protocols. Where a Pre-Action Protocol applies the parties are expected to follow the Pre-Action Protocol. Where no Pre-Action Protocol applies the parties are expected to follow the Practice Direction on Pre-Action Conduct.  

The failure by a party to comply with a Pre-Action Protocol or the Practice Direction may be taken into account by the Court when it comes to decide the question of costs, including who should pay who and what amounts should be paid. 

The Protocols and the Practice Direction are annexed to the Civil Procedure Rules.  

Currently there are the following Pre-Action Protocols:

The Pre-Action Protocol for Personal Injury Claims

This Protocol applies to all claims which include a claim for personal injury apart from medical negligence claims, disease or illness claims and low value personal injury claims arising out of road traffic accidents.

The Pre-Action Protocol for the Resolution of Clinical Disputes

This Protocol applies to all medical negligence claims and clinical disputes.

The Pre-Action Protocol for Disease and Illness Claims

This Protocol applies to all personal injury claims where the injury is not as the result of an accident but takes the form of an illness or disease.

The Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents

This Protocol applies to most personal injury claims arising from road traffic accidents which occurred on or after 30 April 2010 where the value of the personal injury claim is £10,000 or less.

The Pre-Action Protocol for Professional Negligence Claims

This Protocol applies to most claims made against a professional (for example, a solicitor or an accountant) other than construction professionals and healthcare providers.

The Pre-Action Protocol for Defamation Claims

This Protocol applies to all defamation claims.

The Pre-Action Protocol for Construction and Engineering Disputes

This Protocol applies to all construction and engineering disputes, including professional negligence claims against architects, engineers and quantity surveyors.

The Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property

This Protocol applies where there are arrears on a mortgage, a home purchase plan or a secured loan and the property is residential.

The Pre-Action Protocol for Possession Claims based on rent arrears

This Protocol applies to most residential possession claims by social landlords and private registered providers of social housing which are based solely on claims for rent arrears.

The Pre-Action Protocol for Housing Disrepair Cases

This Protocol applies to most civil claims arising from the condition of residential premises.

The Pre-Action Protocol for Judicial Review

This Protocol applies to all judicial review claims.

The gathering and preservation of evidence

As soon as you become aware that a claim may be made against you it is sensible to gather what evidence you can to rebut the claim. For example, it may be appropriate to obtain the version of events from any witnesses, take photographs or collate important documents together.  

You are, in any event, under a duty to preserve certain documents (which includes things stored on a computer) and if you destroy documents you could be found to be in contempt of Court. Generally the documents you will need to preserve are those which help or harm your case and those which help or harm another party’s case.

Responding to the letter of claim

In the majority of cases the letter of claim will indicate when a response is required. If you are unlikely to be able to respond fully by that time you should write to the Claimant (or their solicitor if they have one) without delay explaining why you are unable to respond by that date and giving an indication as to when you will be able to respond.  

It is generally inadvisable to ignore a letter of claim as this could result in Court proceedings and additional costs. 

In responding to a letter of claim you may wish to admit the claim, dispute the claim or admit part of the claim and dispute the rest.  

If you dispute the claim in part or in its entirety you should provide a sufficiently detailed explanation as to why you dispute it. If a Pre-Action Protocol applies your response may need to include certain things.  

If you admit the claim in full or in part you should provide proposals for settling the claim or those aspects of the claim which you admit. This may be by making proposals for repayment by instalments or by making an offer to pay a lump sum in full and final settlement of the claim. Generally such offers should be marked “without prejudice”.

Settlement and Alternative Dispute Resolution

Litigation can be a costly and time consuming process. For this reason you may wish to make an offer to “get rid” of the claim even if you dispute the claim in its entirety. Any such offer should generally be contained in a separate letter and marked “without prejudice”.  

You may also wish, and are indeed expected to consider, alternative dispute resolution. Alternative dispute resolution takes various forms and can include an informal meeting between the parties or a mediation conducted by a mediator who is experienced in helping parties resolve their disputes.