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.
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.
For more information on:
- The gathering and preservation of evidence
- Responding to the letter before claim
- Settlement and alternative dispute resolution