When Should You Have a Lawyer Sign Your Demand Letter? Pros, Cons, and Cost Considerations

Published: January 21, 2025 • Dispute Resolution

A demand letter can be one of the most powerful tools for resolving disputes without litigation. But one question causes more confusion than it should: should your lawyer sign it, or should you send it yourself?

The answer isn’t always obvious, and getting it wrong can cost you money, relationships, or even your legal position. A lawyer’s signature on a demand letter isn’t just letterhead decoration. It’s a strategic choice that changes how the recipient perceives the threat, how courts might later view your conduct, and what ethical rules govern the communication.

In this article, I’ll walk you through the considerations that matter: when a lawyer-signed letter is worth the investment, when a client-signed letter makes more sense, and how to navigate the ethical minefields that can turn a routine demand into a professional liability issue.

Contents

The Strategic Function of a Demand Letter Signature

Before we dive into specific scenarios, let’s understand what changes when a lawyer signs versus when you sign as the client.

When you send a demand letter yourself, you’re communicating as an aggrieved party seeking resolution. The tone is personal, the stakes feel manageable, and the recipient may view it as an invitation to negotiate directly with you. There’s flexibility in the relationship, and if things go sideways, you still have the option to escalate by bringing in counsel later.

When a lawyer signs that same letter, the entire dynamic shifts. The recipient now knows three things immediately: you’re serious enough to spend money on legal counsel, the matter has been evaluated by someone who understands litigation risk, and any response will likely need to go through your lawyer rather than directly to you. The formality increases, settlement posturing begins, and relationships often become more adversarial.

Neither approach is inherently better. The question is which serves your specific situation, and that depends on factors like claim size, counterparty sophistication, relationship preservation goals, and whether you’re dealing with regulatory or criminal exposure.

The Ethics Baseline: Who You’re Writing To Matters

The biggest constraint on whether a lawyer should sign your demand letter isn’t strategy or cost. It’s ethics. California Rules of Professional Conduct and their Model Rule equivalents create clear boundaries about when and how lawyers can communicate with other parties.

Writing to Represented Parties

Rule 4.2 is simple and absolute: if you know the other side is represented by counsel in the matter, you cannot communicate with them directly about that subject without their lawyer’s consent. This means if you’re aware that your contractor, tenant, business partner, or payment processor has retained a lawyer for this dispute, any demand letter must be lawyer-to-lawyer.

This isn’t a choice or a strategic consideration. It’s mandatory. So for disputes involving decent-sized businesses, insurers, or any counterparty where you know counsel is involved, a lawyer-signed letter addressed to their counsel is the only ethical path forward.

Writing to Unrepresented Parties

Rule 4.3 governs communications with unrepresented persons, and this is where things get more nuanced. When a lawyer writes to someone who doesn’t have counsel, that lawyer must clearly identify who they represent, cannot imply they are disinterested or neutral, must correct any misunderstandings about their role, and most importantly, cannot give legal advice to that unrepresented person beyond telling them to get a lawyer.

This matters because a lawyer-signed demand to an unrepresented small vendor or individual triggers all these duties. Your letter needs to walk a fine line: it should explain your client’s position and what you’re demanding, but it can’t coach the recipient on how to respond or what their options are. You’re allowed to say “you may wish to consult with an attorney,” but you can’t say “here’s what you should do to resolve this.”

The practical implication is that when you’re writing to individuals or small businesses without counsel, a lawyer-signed letter puts your professional obligations front and center. You own that communication in ways that don’t apply when your client sends their own letter.

The Extortion Problem: Where Criminal References Get Dangerous

One of the riskiest aspects of demand letters involves mentioning potential criminal liability or regulatory complaints. This is where having a lawyer sign becomes both more important and more dangerous.

California Penal Code Section 518 defines extortion as obtaining property through wrongful use of force or fear, and courts have found that threatening criminal prosecution solely to gain civil advantage crosses into extortion territory. California Bar Formal Opinion 1983-73 clarifies that lawyers may accurately state both civil and criminal consequences of conduct in a demand letter, but threatening to report someone to authorities unless they pay you is unethical and potentially criminal.

The distinction seems subtle but it’s crucial. You can write: “Your conduct may constitute insurance fraud under California Penal Code Section 550, which carries penalties including imprisonment and fines.” You cannot write: “Pay us $50,000 by Friday or we’re reporting you to the district attorney for insurance fraud.”

This is precisely where a lawyer-signed letter becomes valuable. If your dispute involves conduct that might be criminal, fraudulent, or trigger regulatory action, you want a lawyer drafting that language to stay on the right side of the line. But that same lawyer signature means you’re now professionally responsible for ensuring the letter doesn’t become extortionate.

For disputes involving medical malpractice where you might reference Medical Board complaints, payment processor holds where you might mention CFPB violations, or contractor disputes where you might reference licensing violations, a lawyer-signed letter is almost always necessary. The alternative is a client letter that either omits these important pressure points or states them badly enough to create liability.

Ghostwriting and the Letterhead Problem

Many clients ask whether I can draft a letter for them to sign and send themselves. The answer is yes, with caveats.

Limited-scope representation is permitted under Rule 1.2(c) in California and most jurisdictions. I can draft a demand letter for a client to send under their own name as a pro se communication. This is often the right choice for smaller disputes, initial attempts at resolution, or situations where maintaining a lower-key tone serves the client’s interests.

But there’s a critical boundary: I cannot lend my name or letterhead to a client or collection agency that will then use it without my active involvement. California Bar Formal Opinion 1982-68 makes clear that allowing non-lawyers to generate letters on your stationery over your signature without taking an active role in the work is effectively aiding unauthorized practice of law.

This means if you want a lawyer-signed letter, that lawyer must actually supervise and own the work. You’re not renting their letterhead for credibility. You’re paying for their professional judgment, liability, and ethical compliance. The flip side is that if something goes wrong with that letter, whether it’s a defamation claim, an extortion accusation, or an ethics complaint, the lawyer who signed it owns that risk.

For clients, this creates a useful decision point: if the matter is simple and the stakes are low, a ghostwritten letter you send yourself may be sufficient and cheaper. If the matter is complex or risky, you’re paying not just for the letter but for the lawyer’s malpractice insurance and professional accountability.

When a Lawyer-Signed Letter Is Usually Worth the Investment

Now let’s get practical about scenarios where paying a lawyer to sign your demand letter typically makes sense.

High-Stakes or Complex Disputes

For any dispute over $25,000, particularly those approaching six figures, a lawyer-signed demand letter is usually the right first move. These include payment processor fund holds like Stripe or PayPal disputes, serious medical spa injuries, substantial contractor or vendor disputes, intellectual property conflicts, or B2B SaaS contract breaches.

The value isn’t just the lawyer’s signature. It’s that a lawyer will properly identify legal claims and causes of action, organize the facts and timeline correctly, attach the right supporting evidence, include preservation language to prevent spoliation of evidence, and avoid making admissions or overstatements that hurt your position later. When you’re playing for real money, you want the demand letter to read like the first exhibit in your eventual complaint, because it often becomes exactly that.

Institutional or Sophisticated Counterparties

Banks, payment processors, marketplaces, insurers, and mid-sized businesses with in-house counsel have workflows for handling lawyer-signed demands that don’t exist for customer service inquiries. If you’ve ever tried to resolve a Stripe account hold through their support ticket system versus having counsel send a formal demand to their legal department, you know the difference.

These institutions ignore pro se demands routinely. They have too much volume and no incentive to engage until there’s litigation risk. A lawyer-signed letter gets routed to the right people: risk management, in-house counsel, or senior operations staff who have authority to make real decisions. It’s not about intimidation. It’s about accessing the proper escalation channel in an organization that treats legal and non-legal communications completely differently.

Matters with Fee-Shifting Potential

If your dispute involves a contract with an attorneys’ fees clause, a consumer protection statute like the CLRA with fee provisions, or any other situation where you might recover costs and fees from the other side, your pre-litigation demand letter becomes critical evidence in your later fee motion.

Courts evaluating reasonableness of fees look at whether the prevailing party made good-faith efforts to resolve the dispute before filing suit. A detailed lawyer-signed demand letter showing you tried to settle for less than you eventually won is powerful evidence. It also starts the clock on settlement offers that can trigger cost-shifting under Code of Civil Procedure Section 998.

Additionally, in fee-shifting cases, the cost of the demand letter itself becomes recoverable. If you spend $2,000 on a strong demand letter and it results in settlement or creates a fee-shifting record, that $2,000 comes back. If you skip the lawyer letter and go straight to filing a complaint, you’ve lost that pre-suit opportunity to build your fee record.

Regulatory or Criminal Overlap Disputes

Any time your dispute involves potential criminal conduct, regulatory violations, or professional licensing issues, you need a lawyer crafting that communication. Medical malpractice cases where board complaints might be filed, financial services disputes involving CFPB or DFPI issues, contractor disputes involving licensing violations, or any fraud-adjacent conduct requires professional judgment about what to say and how to say it.

The risk of making extortionate threats is real, and the consequences include criminal liability, professional discipline, and destroying your civil case. A lawyer who regularly handles these disputes knows how to reference regulatory and criminal exposure in ways that inform without threatening, and how to document harm in ways that support both civil recovery and regulatory complaints without crossing ethical lines.

When a Client-Signed Letter Is Often Better

The flip side matters just as much: there are plenty of scenarios where having your lawyer sign the demand letter is overkill, counterproductive, or simply poor value.

Small-Dollar Small Claims Disputes

For security deposit disputes, small contractor disagreements under $10,000, minor consumer complaints, or landlord-tenant issues likely headed to small claims court, a client-signed letter often makes more sense as the first move. The cost of a lawyer letter might be 10-20% of the claim value, and small claims judges don’t give extra weight to lawyer communications anyway.

The strategic advantage of starting with a client letter is escalation optionality. You send a firm but polite letter yourself, and if they ignore it or respond badly, you can then bring in a lawyer whose subsequent letter has more impact precisely because it’s the second attempt. If you lead with the lawyer letter and they still don’t respond, you’ve already played your strongest card.

I often draft these letters for clients to send themselves. The cost is lower, we can keep the tone less formal and more relationship-focused, and it preserves the option to escalate later if needed.

Relationship Preservation Scenarios

For disputes with neighbors, ongoing business relationships, contractors you might use again, or co-founders you still work with, a lawyer-signed letter can permanently damage the relationship. It signals that you’ve moved from partner or peer to adversarial mode, and once that line is crossed, it’s hard to return to normal business interactions.

In these situations, I often recommend a carefully worded client-signed letter that’s firm about the problem and what you need but maintains a tone of “I’d like to work this out directly.” If that fails, escalating to a lawyer-signed demand shows you gave them a chance to handle it collaboratively first.

This is particularly relevant for ongoing business disputes where you need the relationship to continue. A contractor you use regularly who made a mistake, a co-working neighbor who violated a boundary, or a business partner you’re still working with on other projects all fall into this category. Starting with a lawyer letter may win the battle but lose the war.

Uncertain Facts or Experimental Demands

Sometimes clients aren’t sure whether they want to push a dispute to litigation, or the facts are still developing. Maybe you’re owed money but you’re not certain the other side is actually in the wrong, or you want to test their response before committing to a legal strategy.

In these situations, a client-signed letter gives you flexibility. You can state your concerns, ask for information, and see how they respond without locking in a legal position. If their response clarifies that they have a legitimate defense or that your facts were wrong, you can adjust without having already committed a lawyer’s professional judgment to a position you now need to walk back.

The risk here is that clients without legal training will often say things in demand letters that hurt them later. Common mistakes include making factual admissions, overstating claims as fraud or criminal when they’re just contract breaches, threatening actions they can’t or won’t actually take, or demanding things they have no legal right to receive. If you’re going to send a letter yourself in an uncertain situation, have a lawyer at least review it first, even if they don’t sign it.

The Cost-Value Framework: How to Decide

Most clients struggle with this decision because they don’t have a framework for evaluating cost against benefit. Here’s how I walk clients through it.

First, consider the claim size. For disputes under $5,000, I rarely recommend a lawyer-signed demand letter as the first step unless there’s fee-shifting potential or the matter is unusually complex. The math simply doesn’t work: spending $1,500 on a demand letter for a $3,000 claim means you need a very high success rate to break even. For claims from $5,000 to $25,000, it depends on complexity and counterparty sophistication. For anything over $25,000, particularly approaching six figures, a lawyer-signed letter is almost always worth it.

Second, evaluate complexity. A straightforward breach of contract where they simply didn’t pay an invoice is much different from a multi-party dispute involving IP ownership, regulatory compliance, and layered contractual relationships. Simple disputes can often start with client letters. Complex disputes need professional framing from the start.

Third, assess your counterparty. Large institutions, insurers, platforms, and represented parties require lawyer letters. Individuals and small businesses without counsel can often be approached with client letters first. The sophistication gap matters because it determines how they’ll receive and respond to different types of communication.

Fourth, consider your likely path. If this is almost certainly going to small claims court, lawyer letters add less value. If you’re heading to superior court or arbitration with significant litigation costs, the demand letter becomes part of your overall litigation strategy and budget.

Finally, think about fee recovery. If you have a strong attorneys’ fees clause or fee statute, the cost of the demand letter is potentially recoverable, which changes the value equation significantly.

A simple rule of thumb: lawyer-signed letters make sense for six-figure claims, institutional counterparties, regulatory exposure, anticipated litigation with fee clauses, and any dispute where you’ll spend $10,000+ on litigation if the letter doesn’t work. Client-signed letters make sense for sub-$10,000 disputes with individuals or small businesses, small claims matters, and situations where you want to test the waters before committing to a legal strategy.

What Changes When a Lawyer Signs

Understanding what you’re paying for when you have a lawyer sign a demand letter helps justify the cost. The differences aren’t just cosmetic.

A lawyer-signed letter will correctly identify causes of action using proper legal terminology rather than lay descriptions. It will organize facts chronologically with supporting exhibits in a way that mirrors how they’ll be presented in litigation. It will include specific preservation language to prevent the other side from destroying evidence. It will reference applicable statutes and case law where appropriate without overloading the letter with legal jargon. It will make settlement offers in ways that preserve Rule 408 protection and set up potential Section 998 cost-shifting.

Most importantly, a lawyer letter avoids the common traps that client letters fall into. Clients often overstate their claims, calling breaches of contract “fraud” or “criminal conduct” when they’re simple civil disputes. They make factual admissions by saying things like “I know I was late paying the deposit, but still…” They demand things they have no right to receive. They make threats they can’t or won’t actually carry out. They include inflammatory language that feels good to write but hurts their case later.

A lawyer acts as a professional filter for all of this. The demand letter that results may be less emotionally satisfying to the client, but it’s far more effective at achieving legal objectives.

The Debt Collection Exception

One narrow area deserves specific mention: consumer debt collection. If you’re collecting a consumer debt on behalf of a creditor, the Fair Debt Collection Practices Act creates specific requirements and risks that make lawyer involvement complicated.

Lawyers who regularly collect consumer debt are considered “debt collectors” under the FDCPA and must comply with its requirements, including specific disclosure language, validation notices, and prohibitions on misleading statements. Courts have scrutinized law firm demand letters to determine whether they imply “meaningful attorney involvement” when they’re actually mass-produced letters without real lawyer review.

For most readers of this article handling business disputes or non-collection matters, FDCPA concerns won’t apply. But if you’re in the consumer debt collection space, know that lawyer-signed letters trigger significant additional compliance requirements. In some cases, a non-lawyer collection letter may actually be safer from a regulatory standpoint than a lawyer letter that doesn’t fully comply with FDCPA requirements.

<h3>Can I have my lawyer draft a letter but sign it myself?</h3>

Yes, this is called limited-scope representation or unbundling, and it’s explicitly permitted in California under Rule 1.2(c). Your lawyer can draft a demand letter for you to send under your own name as a pro se communication. This is often a good middle-ground option for smaller disputes where you want professional drafting but don’t need the escalation that comes with a lawyer’s signature.

The key is being clear about the scope of representation. Make sure your lawyer knows you’ll be signing and sending it yourself, so they can draft it appropriately without including lawyer-specific language or certifications. And understand that once you send it, any response will likely come directly to you rather than to your lawyer, so you’ll need to manage that communication yourself or forward it to counsel.

One caution: if you modify the letter after your lawyer drafts it, you own those changes. I’ve seen clients take a perfectly good ghostwritten demand letter and add inflammatory paragraphs that undermine everything the lawyer carefully crafted. If you’re going to edit it, run those edits past your lawyer first.

<h3>What if the other side ignores my client-signed letter?</h3>

This is actually a benefit of starting with a client letter rather than leading with a lawyer-signed demand. If they ignore your initial letter, you have a clear escalation path: bring in a lawyer for the second attempt. That lawyer letter now carries more weight because it demonstrates you gave them a chance to resolve it informally first, and they chose not to respond.

In the lawyer-signed second letter, you can reference the fact that you previously attempted to resolve this directly and received no response, which strengthens your position and may matter later when a court evaluates whether you made good-faith efforts to settle before litigation.

Just make sure your first letter has a clear deadline and specifically states what you expect them to do. A vague letter that says “please contact me to discuss this” is less effective than one that says “I expect a response by March 15 explaining how you intend to refund the $8,500 deposit.”

<h3>Should I mention potential lawsuits in my demand letter?</h3>

If a lawyer signs the letter, appropriate references to potential litigation are generally fine and often necessary to convey the seriousness of the dispute. Phrasing like “we are prepared to pursue all available legal remedies including filing suit in Los Angeles Superior Court” or “if this matter cannot be resolved, we will have no choice but to seek relief through arbitration as required by the contract” gives the recipient a clear understanding of next steps.

If you’re signing the letter yourself, be more careful about litigation threats. It’s one thing to say “I may need to pursue this through the courts if we can’t resolve it” and quite another to say “I will sue you immediately and destroy your business reputation.” The former is a reasonable statement of intent; the latter could be construed as improper harassment or an empty threat.

The safest approach is to focus on what you want them to do rather than what you’ll do if they don’t. “I am requesting a full refund of $15,000 by March 30” is more effective than “If you don’t refund me $15,000 by March 30, I’m filing a lawsuit and going after your contractor’s license.”

<h3>Can mentioning possible criminal liability in a demand letter be considered extortion?</h3>

This is one of the most dangerous areas in demand letter practice, and it’s exactly why having a lawyer draft these communications matters. You can accurately state that conduct may have criminal implications. You cannot threaten to report someone to law enforcement or prosecutors unless they pay you.

The difference: “Your submission of false invoices may constitute fraud under California Penal Code Section 487, which carries potential felony penalties” is generally permissible as a statement of legal consequences. “Pay me $50,000 by Friday or I’m reporting you to the district attorney for fraud” is likely extortionate and potentially criminal itself.

California Bar Formal Opinion 1983-73 provides guidance on this, essentially saying lawyers can describe both civil and criminal aspects of conduct in demand letters, but cannot use threats of criminal prosecution solely to gain civil advantage. The line isn’t always bright, which is precisely why you want a lawyer evaluating this if your dispute involves conduct that might be criminal, fraudulent, or trigger regulatory action.

If you’re drafting your own letter and the situation involves possible criminal conduct, either hire a lawyer to draft that section or simply omit the criminal references entirely and focus on your civil claims.

<h3>How much should a lawyer-signed demand letter cost?</h3>

This varies significantly based on complexity, claim size, and the lawyer’s hourly rate, but I can give you general ranges. For straightforward breach of contract demands in simple disputes, expect $1,000 to $2,500. For more complex multi-party disputes involving regulatory issues, IP concerns, or extensive fact investigation and evidence compilation, costs might run $3,000 to $7,500 or more.

The key is making sure the cost makes sense relative to the claim value and your overall budget for the dispute. If you’re pursuing a $10,000 claim and the lawyer wants $5,000 to write the demand letter, that’s probably not rational unless there’s significant fee-shifting potential. If you’re pursuing a $500,000 claim and the lawyer wants $7,500 for a comprehensive demand package, that’s likely money well spent.

Many lawyers, including my practice, offer fixed-fee demand letter services where you know the cost upfront. This is better than hourly billing for demand letters because it eliminates the uncertainty about how much time the lawyer will spend on revisions and research.

Ask potential counsel how they price demand letters, what’s included in that fee (does it cover revisions? follow-up correspondence? reviewing their response?), and whether the cost is recoverable if you later prevail in litigation with a fee-shifting provision.