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

What is a letter before claim?

A letter before claim (sometimes known as a ‘letter before action’) is a letter putting a person on notice that court proceedings may be brought 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 (ADR) 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 so if 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 (ie, 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. Legal expenses insurers will usually 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 Citizen’s Advice or from a local law centre.

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. Current pre-action protocols include:

  • personal injury;
  • resolution of clinical disputes;
  • construction and engineering ;
  • defamation;
  • professional negligence;
  • judicial review;
  • disease and illness;
  • housing disrepair;
  • possession claims by social landlords;
  • possession claims for mortgage arrears;
  • dilapidation of commercial property;
  • low value personal injury road traffic accident claims;
  • low value personal injury employers’ and public liability claims.

The gathering and preservation of evidence

As soon as you become aware that a claim may be made against you, 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.

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 before claim

According to the Practice Direction on Pre-Action Conduct, the letter before claim should include the basis on which the claim is made, a summary of the facts, what the claimant wants from you, and if money, how the amount is calculated.

You need to respond to the letter before claim within a reasonable time – 14 days in a straightforward case and no more than three months in a very complex one. Your reply should confirm whether you accept the claim and, if it is not accepted, the reasons why, together with an explanation as to which facts and parts of the claim are disputed. If you have any documents which back your stance, enclose these too. You should also state whether you are making a counterclaim and, if so, provide details of this.

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. This takes various forms and can include an informal meeting between the parties, use of an ombudsman, arbitration or mediation conducted by a mediator who is experienced in helping parties resolve their disputes. If you unreasonably refuse to consider ADR when invited to, the court might order you to pay additional court costs.