Before You Send That ChatGPT Demand Letter: Critical Mistakes You Must Catch

 

 

Three months ago, a tech founder sent me his ChatGPT-drafted demand letter threatening Stripe with legal action over $47,000 in frozen funds. The letter cited “Federal Banking Regulation 482.3(b)” – a statute that doesn’t exist. It demanded Stripe respond “within 72 hours as required by federal law” – pure fiction. And it threatened “treble damages and attorney’s fees” – remedies that aren’t available in payment processor disputes.

Stripe’s legal team responded with one sentence: “Your cited statute does not exist. We are closing this matter.”

That’s the problem with AI-generated demand letters. They sound authoritative. They look professional. They feel powerful. But they can collapse under even basic scrutiny – and once you send a demand letter with your name on it, you can’t unsend it.

I’m  a California attorney  who has reviewed over hundreds of business disputes in my 14+ years of practice. In the past year alone, I’ve seen dozens of ChatGPT-generated demand letters that range from “needs minor fixes” to “actively harmful to the sender’s case.” This guide will teach you how to audit an AI-generated demand letter before it damages your legal position.

Understanding What ChatGPT Actually Does (And Doesn’t Do)

Before we dive into the audit process, you need to understand what you’re dealing with. ChatGPT is a language prediction model. It doesn’t “know” the law – it predicts what words should come next based on patterns in its training data. When you ask it to write a demand letter, it’s essentially saying: “Based on millions of documents I’ve seen, here’s what a demand letter typically looks like.”

This creates three fundamental problems:

First, ChatGPT cannot verify facts. If you tell it you signed a contract on March 15th, it has no way to check whether that’s true. If you say you complained “multiple times,” it can’t verify your email records. It will simply incorporate whatever you tell it into a plausible-sounding narrative.

Second, ChatGPT doesn’t understand your specific legal context. It doesn’t know whether you’re in California or New York, whether your dispute involves a contract with an arbitration clause, or whether you’ve already blown past a statute of limitations deadline. It will write about “federal consumer protection laws” without knowing which ones actually apply to your situation.

Third, ChatGPT has no strategic judgment. It can’t assess whether an aggressive tone will help or hurt your case, whether you’re better off threatening arbitration or negotiating quietly, or whether the remedy you’re demanding is remotely realistic. It writes what sounds impressive, not what actually works.

The Seven Categories of Errors in AI-Generated Demand Letters

Through analyzing dozens of ChatGPT demand letters, I’ve identified seven recurring categories of problems. Understanding these categories will help you know what to look for during your audit.

Factual Errors and Unsupported Assumptions

AI fills gaps in your prompt with assumptions. If you said you “tried to contact customer service,” ChatGPT might write “Despite numerous attempts over several weeks to reach customer service…” even if you only tried once. These embellishments feel like they strengthen your case, but they’re factual misrepresentations that opposing counsel will exploit.

Common factual errors include:

• Wrong dates or invented timelines
• Misstated contract terms or payment amounts
• Attributed statements or promises that weren’t actually made
• Claimed damages without supporting calculation

Hallucinated Legal Citations

This is the most dangerous category. ChatGPT will confidently cite statutes, regulations, and case law that sound real but don’t exist. I’ve seen letters cite “California Civil Code § 2847.5” (doesn’t exist), “Federal Trade Commission Regulation 16 CFR § 429.1(b)(3)(ii)” (real regulation but misquoted and misapplied), and various fabricated federal “banking regulations.”

The AI has learned that demand letters often contain citations, so it generates citation-shaped text. But it’s not actually looking up real laws – it’s predicting what a citation should look like based on patterns.

Misapplied Legal Theories

Even when ChatGPT references real laws, it often misapplies them. I’ve seen AI demand letters that:

• Invoke California’s consumer protection statutes for B2B commercial disputes
• Threaten “breach of fiduciary duty” claims in contexts where no fiduciary relationship exists
• Demand “punitive damages” for simple breach of contract
• Reference “federal law” requirements that are actually state-specific

Ignored Contractual Terms

ChatGPT doesn’t automatically check your contract for arbitration clauses, forum selection provisions, limitation of liability caps, or mandatory notice requirements. It will happily threaten “immediate court action” when your contract requires binding arbitration. It will demand amounts that exceed contractual damage caps. It will skip mandatory cure periods or pre-dispute resolution procedures.

These errors can be fatal. If you threaten to sue when you’re contractually required to arbitrate, you’ve just signaled to opposing counsel that you (a) didn’t read the contract, and (b) don’t have competent legal advice.

Unrealistic or Impossible Remedies

AI loves big threats. It will demand:

• “Treble damages” when no statute provides for them
• “All attorney’s fees and costs” when you’re not the prevailing party yet and may not be entitled to fees at all
• “Immediate injunctive relief” for disputes where injunctions are impractical or unavailable
• “Reporting to federal authorities” when no federal violation exists

Demanding every conceivable remedy doesn’t make you look tough – it makes you look like you don’t understand your own case.

Tone Problems

ChatGPT tends to oscillate between two extremes: overly formal 19th-century legalese (“Wherefore, and in light of the foregoing…”) or unnecessarily aggressive posturing (“You have engaged in willful, malicious, and egregious violations…”). Neither tone is typically strategic.

Worse, AI sometimes generates language that crosses the line into potential defamation, extortion, or abuse. Phrases like “your systematic fraud scheme” or “we will ensure your business reputation is destroyed” can create liability for the sender.

Missing Critical Components

Ironically, while AI excels at generating impressive-sounding language, it often forgets basic structural elements:

• No clear, specific demand (What exactly do you want them to do?)
• No realistic deadline with a date
• No articulation of next steps if demand is ignored
• No reference to attached supporting documents

Without these elements, you don’t have a demand letter – you have a complaint.

Step-by-Step Audit Process

Now let’s walk through how to actually audit your ChatGPT-generated demand letter. I recommend doing this in three passes, each focusing on a different aspect of the letter.

First Pass: Factual Accuracy Audit

Start with a printed copy of your AI-generated letter and a highlighter. Your goal in this pass is to verify every factual statement.

Verify Party Identification

Check that the letter correctly identifies all parties. This sounds basic, but I regularly see errors here. For example:

Wrong: A letter addressed to “Stripe, Inc.” when the actual contracting party is “Stripe Payments Company.”

Wrong: A letter that treats an Amazon marketplace seller and Amazon.com as the same entity.

Wrong: Using someone’s personal name when the contract was actually with their LLC or corporation.

Pull out your contract, invoice, or terms of service and verify the exact legal name of the party you’re making demands against. This matters because you may later need to file in small claims or arbitration, and incorrect party names can derail your case.

Audit the Timeline

Go through the letter sentence by sentence and highlight every date, time reference, or sequence word (“after,” “before,” “subsequently,” “immediately”). Then create a simple timeline on a separate sheet of paper with your actual documentation: emails, receipts, screenshots, etc.

Compare the two. Look for:

Invented dates: ChatGPT will often add specific dates you never provided. If you said “last month” in your prompt, it might write “on or about October 15, 2024” – which could be wrong.

Wrong sequence: AI sometimes scrambles the order of events, especially if your prompt wasn’t strictly chronological.

Exaggerated duration: If you complained once, the AI might write “repeatedly complained over several weeks.” If you can’t document “repeatedly” and “several weeks,” fix it now.

Missing key dates: Sometimes ChatGPT omits important dates like when you first noticed the problem or when you were promised a resolution.

Verify All Numbers and Calculations

Every dollar amount in your letter needs to be correct and explainable. Create a simple spreadsheet showing:

• Original amount owed or paid
• Any refunds or credits already received
• Late fees or interest (if applicable and contractually supported)
• Your net demand

AI frequently makes errors here because it doesn’t actually calculate – it guesses what seems reasonable. I’ve seen letters that demand $10,000 for a $3,000 contract dispute with no explanation for the difference, or letters that forget to account for partial payments already received.

If you’re claiming consequential damages (lost profits, business interruption, etc.), you need a factual basis and calculation. “At least $50,000 in lost revenue” sounds impressive but is meaningless without supporting detail. Either provide the detail or remove the claim.

Remove Unsupported Characterizations

ChatGPT loves adjectives and accusations: “fraudulent,” “deceptive,” “intentional,” “willful,” “egregious,” “bad faith.” Read each one carefully and ask:

• Can I prove this characterization, or am I just angry?
• Does this characterization accuse someone of a crime or serious dishonesty?
• Would I be comfortable repeating this under oath in court?

The legal standard is higher than you think. “Fraud” requires proving intentional misrepresentation. “Bad faith” has specific legal meanings. If you can’t prove intent, stick to facts: “You promised X, delivered Y, and I suffered Z damage as a result.”

Second Pass: Legal Accuracy Audit

This is where most AI-generated demand letters fail catastrophically. You’re now looking for legal errors, hallucinations, and strategic missteps.

Identify Every Legal Citation

Use a different color highlighter and mark every reference to law, including:

• Specific statutes (e.g., “California Civil Code § 1542”)
• Regulations (e.g., “15 U.S.C. § 1692”)
• Case names (e.g., “under Smith v. Jones”)
• General legal references (e.g., “federal consumer protection law requires”)

Verify Each Citation

For each statute or regulation cited, do a quick search on Google using the exact citation plus the word “official” or “text.” For example: “California Civil Code 1542 official text.” You’re looking for:

Does this statute exist? If you can’t find it quickly on official government websites or well-established legal databases, assume it’s hallucinated. I’ve seen AI invent statute numbers that sound plausible but don’t exist.

Does it say what the letter claims? Sometimes the statute exists but doesn’t support the point the AI is making. For example, ChatGPT might cite a statute about residential landlord-tenant relationships and apply it to a commercial lease.

Is it current law? Occasionally AI will cite statutes that have been repealed or substantially amended.

If you cannot verify a citation within 5-10 minutes of reasonable searching, remove it. It’s safer to make your argument based on contract language and facts than to risk citing fake law.

Check for Contract-Based Arguments First

If your dispute involves a written agreement, your strongest arguments usually come from that agreement itself, not from statutory law. Look at whether the AI letter:

Quotes the actual contract language: Did ChatGPT quote the specific clause that was breached, or did it paraphrase it incorrectly?

Identifies the specific breach: Does the letter clearly explain which contractual obligation was violated and how?

Ignores contractual limitations: Many contracts include limitation of liability clauses, damages caps, or exclusive remedy provisions. Did the AI demand damages that exceed these caps?

Misses mandatory procedures: Some contracts require written notice, cure periods, or mediation before you can proceed to arbitration or litigation. Did ChatGPT skip these?

Audit Claimed Remedies

Read through every remedy or penalty the letter demands. For each one, ask: “Is this actually available to me under the law and my contract?”

Attorney’s Fees: In the United States, each side generally pays their own attorney’s fees unless (a) a statute specifically provides for fee-shifting, or (b) your contract has an attorney’s fees clause. Don’t demand “all attorney’s fees and costs” unless you can point to the specific contractual or statutory basis.

Treble Damages: Treble (triple) damages are only available under specific consumer protection statutes, anti-trust laws, or other special circumstances. They’re not available for ordinary breach of contract. If ChatGPT demanded treble damages, verify there’s an actual statute supporting that claim.

Punitive Damages: These are rarely available outside of intentional torts. In contract disputes, you generally cannot get punitive damages unless you can prove fraud or malice that’s independent of the breach itself. Remove punitive damages claims unless you’re confident you can prove them.

“Reporting to Authorities”: AI loves to threaten reporting to the FTC, state attorney general, Better Business Bureau, or other regulatory bodies. Only make this threat if there’s actually a consumer protection violation or regulatory issue involved. Empty threats damage your credibility.

Check Statute of Limitations Awareness

While ChatGPT won’t know your specific statute of limitations situation, your letter should at least not contain language that undermines your position. For example, if your letter says “This incident occurred over three years ago” and the statute of limitations for breach of contract in your state is two years, you may have just admitted your claim is time-barred.

If timing is potentially close to any limitation period, consult an attorney before sending the letter. Statutes of limitations are complex, with various rules about when they start running, tolling, and discovery rules.

Third Pass: Strategic and Structural Audit

Now that you’ve fixed the facts and law, assess whether the letter actually serves your interests strategically.

Verify Your Letter Has All Essential Components

A complete demand letter includes:

Clear header: Your name and contact information, recipient’s name and address, date, subject line (e.g., “Demand for Payment – Invoice #12345” or “Formal Demand for Refund – Order #67890”).

Background section: Concise chronological narrative explaining what happened. This should be factual, not emotional.

Breach or violation: Specific explanation of what obligation was breached, what law was violated, or what representation was false. Reference contract clauses or specific promises.

Harm/damages: Clear explanation of what loss or damage you suffered as a direct result. Include calculation if claiming money damages.

Demand: Exact statement of what you want the recipient to do. “Pay $X,” “Provide refund of $Y,” “Release frozen funds,” “Correct the false statement,” etc. Be specific.

Deadline: Specific date by which you expect response or compliance. Typically 10-30 days is reasonable depending on complexity.

Next steps: Clear statement of what you will do if the demand is not met. “If I do not receive payment by [date], I will proceed to small claims court” or “If this matter is not resolved by [date], I will initiate arbitration under the agreement’s dispute resolution clause.”

Supporting documents: Reference to attached evidence (contracts, invoices, emails, screenshots). Actually attach them.

If any of these elements are missing or vague, strengthen them before sending.

Assess the Tone

Read your letter aloud. Imagine it being read in court six months from now. Imagine the recipient’s lawyer reading it. How does it sound?

The goal is usually firm, clear, and professional – not angry, threatening, or desperate. You want the tone to say: “I am serious, I know my rights, I’m prepared to enforce them through proper legal channels, and I’d prefer to resolve this reasonably.”

Red flags to remove or soften:

• All-caps words or sentences (looks unprofessional)
• Multiple exclamation marks (looks emotional)
• Personal insults or character attacks
• Threats about social media campaigns, online reviews, or “ruining your reputation”

That last category is particularly important. Threats that sound like blackmail or extortion can backfire badly. It’s fine to say “I will pursue all available legal remedies including arbitration and small claims court.” It’s not fine to say “Pay me or I will destroy your business reputation online.”

Match the Letter to Your Realistic Next Step

Before finalizing the letter, honestly assess what you’re actually prepared to do if the recipient ignores your demand or refuses. Your letter should align with your realistic next step, not with what sounds most intimidating.

For example:

If you’re willing to file in small claims court: Your letter can appropriately mention small claims as the next step. But make sure your claimed amount is within your state’s small claims jurisdiction (typically $5,000-$12,500 depending on the state).

If there’s an arbitration clause: Your letter should reference initiating arbitration, not filing suit. Include the specific arbitration organization mentioned in the contract (AAA, JAMS, etc.).

If the amount is small and you just want resolution: Sometimes a shorter, less aggressive letter works better. “I’m writing to resolve this issue before pursuing formal dispute resolution” can be more effective than “I will pursue the maximum remedies available under law.”

If you’re not actually prepared to follow through: Don’t make threats you won’t keep. If you demand payment by November 30th “or I will file suit,” and then November 30th passes with no response and you do nothing, you’ve just taught the recipient that your threats are empty.

Consider the Relationship Context

ChatGPT doesn’t know whether this is a one-time dispute with someone you’ll never deal with again, or a disagreement with a long-term business partner, landlord, or platform you depend on. The tone and aggressiveness should vary accordingly.

One-time transaction: You can afford to be more formal and direct since there’s no ongoing relationship to preserve.

Ongoing relationship: Even when making firm demands, consider language that leaves room for resolution: “I hope we can resolve this without formal proceedings” or “I’ve valued our business relationship and believe we can find a mutually acceptable solution.”

Platform or processor disputes: If you’re dealing with Stripe, PayPal, Amazon, or similar platforms, understand that you may need to continue using their platform even after the dispute. Aggressive personal attacks on platform employees rarely help and may harm your account standing long-term.

Special Considerations for Different Types of Disputes

Different dispute types require different emphases in your audit process. Here are some category-specific tips:

Payment Processor Freezes (Stripe, PayPal, Square)

These disputes have specific characteristics that AI often misses:

Correct entity names matter: You’re usually contracting with a specific entity (Stripe Payments Company, PayPal, Inc., Square, Inc.), not a generic “Stripe” or “PayPal.”

Terms of Service are contractual: Your strongest arguments come from the specific ToS provisions about acceptable use, reserve policies, and dispute resolution. Make sure the AI letter actually quotes relevant ToS sections.

Arbitration is typically mandatory: Most processor agreements require arbitration. Your letter should acknowledge this and reference your willingness to arbitrate if necessary.

Focus on documentation: Processors respond to evidence. Your letter should reference specific proof you’re attaching: transaction records, customer communications, shipping confirmations, etc.

Residential Lease Disputes

Landlord-tenant law is heavily state-specific and regulated. AI errors here can be particularly damaging:

Know your jurisdiction’s rules: California landlord-tenant law is different from Texas law is different from New York law. Generic “tenant rights” language isn’t helpful. Remove generic references and stick to your specific facts and lease terms.

Security deposit claims need precision: Most states require itemized deductions and have specific timelines. Your letter should reference the actual statutory requirements in your state and the dates involved.

Habitability claims require documentation: If you’re claiming uninhabitable conditions, you need photos, written complaints to the landlord, and ideally inspection reports. ChatGPT might write about “numerous complaints” – make sure you can prove them.

Notice requirements matter: Many lease disputes involve specific notice requirements. Did you provide proper written notice of the issue? Did you give the landlord a reasonable opportunity to cure? Your letter should demonstrate compliance with these procedural requirements.

Business-to-Business Contract Disputes

B2B disputes are generally less regulated than consumer disputes, so your contract language is typically more important than statutory law:

Integration clauses limit what matters: If your contract has an integration clause (stating that the written agreement is the complete agreement), you generally can’t rely on verbal promises or preliminary negotiations. Make sure your letter focuses on what’s in the written contract.

Limitation of liability clauses: Many B2B contracts cap damages at the amount paid under the contract or some other specific limit. Don’t demand $50,000 in damages if your contract caps liability at $10,000.

Notice provisions are strict: Business contracts often specify exactly how notice must be given (email to specific address, certified mail, etc.) and time periods for notice. Follow these precisely.

Commercial reasonableness matters: In business disputes, courts expect parties to act commercially reasonably. Your letter should reflect that you’ve made reasonable efforts to mitigate damages and resolve the dispute informally.

Consumer Refund Disputes

When seeking refunds for defective products or services, focus on:

Warranty terms: Quote the specific warranty language, return policy, or money-back guarantee that was offered. Don’t just cite generic consumer protection law.

Timely action: Many return and refund rights are time-limited. Make clear that you acted within the required timeframe.

Proper process: If there was a required process for returns or warranty claims, document that you followed it. If the process was unreasonable or they didn’t follow their own policy, point that out specifically.

Actual damages: Be clear about what you paid, what you received (or didn’t receive), and what refund you’re seeking. Include order numbers, transaction IDs, and receipts.

Red Flags That Mean You Need Professional Review

Some situations are simply too risky to rely on a self-audited AI letter, even if you follow every step in this guide. You should strongly consider professional legal review if any of these apply:

High financial stakes: If the amount in dispute is significant for you or your business – typically anything over $10,000 or any amount that would materially impact your finances – the cost of professional review is justified insurance.

Complex contracts: Technology agreements, licensing deals, partnership agreements, SaaS contracts, IP licenses, and investment documents all have specific legal nuances that AI doesn’t understand. These need professional analysis.

Employment matters: Wage and hour disputes, discrimination claims, harassment allegations, wrongful termination, and employment contract disputes involve both federal and state employment law. AI-generated letters in this space are particularly risky because employment law is highly technical and consequences of errors can be severe.

Defamation or reputation issues: If your dispute involves false statements, damaged reputation, or privacy violations, you’re in an area where the wrong language can create liability for you. Defamation law is complex, with specific rules about truth, opinion, privilege, and damages. Don’t DIY this.

Intellectual property disputes: Copyright, trademark, patent, and trade secret claims all have specific legal requirements and procedures. An improperly drafted demand letter can actually weaken your IP rights or create unexpected obligations.

Disputes with public companies or well-known brands: Large companies and platforms have experienced legal teams. An amateur demand letter, even a well-audited one, immediately signals your lack of representation and may result in a more aggressive response or simply being ignored.

Regulatory or licensing implications: If the dispute could affect professional licenses, regulatory compliance, government contracts, or similar matters, you need professional counsel.

Multiple parties or jurisdictions: If your dispute involves parties in different states or countries, or if you’re making demands against multiple related entities, jurisdictional and choice-of-law issues require professional analysis.

Potential for significant counterclaims: If there’s any risk that the recipient might sue you in response, you need to think about defensive issues before sending a demand letter. Sometimes the act of making a demand can precipitate a counterclaim.

Prior relationship breakdown: If there’s already hostility, threats of litigation from the other side, or if you’ve already had counsel-to-counsel communications, don’t try to proceed with a DIY demand letter.

Final Checklist Before Sending

Once you’ve completed your three-pass audit, use this final checklist:

☐ Every fact has been verified against documentation

☐ All party names and addresses are correct

☐ All dollar amounts are accurate and explained

☐ Timeline is accurate and supported by evidence

☐ Every legal citation has been verified or removed

☐ Contract terms are quoted accurately

☐ Demanded remedies are actually available

☐ Letter acknowledges any arbitration or dispute resolution requirements

☐ Tone is professional and strategic

☐ All threats are realistic and ones you’re prepared to follow through on

☐ Specific demand is clear

☐ Realistic deadline with specific date is included

☐ Next steps are articulated

☐ Supporting documents are referenced and attached

☐ Letter is on appropriate letterhead or plain professional format

☐ Spelling and grammar are correct

☐ You’ve kept a copy of the final version sent

☐ You’ve documented when and how you sent it

Frequently Asked Questions

Can I safely use ChatGPT for any demand letter without a lawyer?

The honest answer is: it depends on the stakes and your comfort level with legal risk.

For very small, straightforward consumer disputes – think a $300 refund on a defective product with a clear return policy – a carefully audited ChatGPT letter may be reasonable if you follow the process in this guide. You’re essentially using AI as a word processor that helps you organize your thoughts. The legal risk is relatively low because the facts are simple, the contract terms are clear, and the worst-case outcome is that your letter doesn’t work and you’re out the time you spent.

But even in that scenario, you need to be meticulous about the audit process. You must verify every fact, remove any legal citations you can’t personally verify, ensure your tone is professional, and make sure you’re not making threats you can’t back up.

The larger the amount in dispute, the more complex the contractual relationship, the more sophisticated the other party, or the more your claim depends on nuanced legal arguments, the more dangerous it becomes to proceed without professional review. By the time you’re dealing with disputes over $5,000, business contracts, employment issues, IP matters, or anything that could result in litigation, the cost of professional legal review is almost always justified compared to the risk of sending an improperly drafted letter.

Think of it this way: if you wouldn’t feel comfortable representing yourself in small claims court on the issue, you probably shouldn’t be sending a DIY demand letter about it either.

What if opposing counsel points out that my letter contains AI-generated errors?

This is exactly why the audit process is so critical. If you send a letter with hallucinated statutes, impossible remedies, or obvious AI-generated language, opposing counsel will absolutely point it out – and it will damage your position significantly.

When a lawyer receives a demand letter with citations to non-existent laws or threats of unavailable remedies, it tells them several things: (1) you don’t have competent legal representation, (2) you probably don’t understand your own case very well, and (3) they can likely ignore your letter or respond with a token offer knowing you’re unlikely to follow through effectively.

I’ve seen this play out multiple times. A client sends an AI-generated letter with obvious errors. The recipient’s lawyer responds with something like: “We note that the statute you cited does not exist, and the remedies you threaten are not available in this type of dispute. We consider this matter closed.” Now what? You’ve blown your credibility, and you’re in a weaker negotiating position than when you started.

This is precisely why I emphasize removing any legal citations you cannot personally verify. It’s better to have a letter that says “You breached our contract by failing to deliver the services you promised, causing me $X in documented damages. I demand payment of $X by [date] or I will pursue my remedies through the dispute resolution process specified in our agreement” than to have a letter full of fake law that gets immediately dismissed.

Should I tell the recipient that I used ChatGPT to draft the letter?

Absolutely not. There is no strategic benefit to disclosing that AI helped draft your letter, and there are significant downsides.

First, it immediately signals that you likely don’t have legal representation, which can weaken your negotiating position. Second, it may cause the recipient to scrutinize your letter more carefully for AI-typical errors, looking for reasons to dismiss it. Third, it’s simply unnecessary – the letter should stand or fall based on its substantive merits, not on how it was drafted.

The proper perspective is this: ChatGPT is a drafting tool, like Microsoft Word or a legal template. You wouldn’t send a letter saying “I wrote this in Microsoft Word.” You also wouldn’t say “I used a template I found online.” The focus should be on whether the final letter accurately represents the facts, correctly states the law, and effectively advances your interests.

What matters is that the final version you send is factually accurate, legally sound (or at least not legally problematic), and strategically appropriate. How you got there is irrelevant to the recipient.

That said, if you’re working with a lawyer and asking them to review or revise your AI draft, you absolutely should tell them you used AI and provide them with both the prompts you used and any source documents. This helps your lawyer understand what they’re working with and avoid inadvertently relying on AI-generated content that hasn’t been verified.

Can using ChatGPT for my demand letter affect attorney-client privilege or confidentiality?

This is an important and evolving question. The short answer is yes, it can potentially affect confidentiality and privilege, so you need to be careful about what information you input into AI tools.

Attorney-client privilege protects confidential communications between you and your lawyer for the purpose of seeking or providing legal advice. It does not generally protect communications between you and a third-party AI service. When you input information into ChatGPT, you are technically sharing that information with OpenAI (or whatever AI service you’re using), subject to their terms of service and privacy policy.

This creates several risks:

Waiver of privilege: If you take privileged communications from your attorney (strategy memos, legal analysis, etc.) and paste them into ChatGPT to generate a demand letter, you may be waiving the privilege by disclosing that information to a third party. In some circumstances, this could require disclosure of those communications in litigation.

Confidentiality concerns: Even if privilege isn’t an issue, you’re potentially sharing sensitive business information, personal details, or strategic information with an AI service. You should review the AI provider’s terms of service and privacy policy to understand how they may use or store your data.

Work product concerns: In addition to attorney-client privilege, there’s also work-product protection for materials prepared in anticipation of litigation. If you’re using AI to develop litigation strategy, you may be creating work product that could potentially be discoverable if you’ve shared it with a third-party AI service.

Best practices to protect yourself:

First, don’t put any communications with your lawyer into AI tools without first discussing it with your lawyer and getting their guidance on how to proceed safely.

Second, be thoughtful about what information you input. Use AI to organize and draft language around facts that you’d be comfortable disclosing anyway, rather than sensitive strategy or confidential business information.

Third, if you’re working with a lawyer, let them handle the AI interaction, or at least work under their guidance on what can and cannot be safely input into AI tools.

Fourth, use AI services that offer better privacy protections when possible. Some services offer enterprise versions with stronger data protection, though these typically come at a cost.

What should I do if the recipient’s lawyer responds pointing out errors in my letter?

First, don’t panic. The fact that you made some errors in your demand letter doesn’t mean your underlying claim is invalid – it just means you need to correct course.

If their response simply points out technical errors (wrong statute number, misidentified party name, etc.) but doesn’t address your substantive claim, acknowledge the correction professionally and refocus on the merits: “Thank you for the correction regarding [specific error]. However, the fundamental issue remains: [restate your core claim in simple terms based on facts and contract]. I request that you address the substantive issue of [the actual problem] and provide a response regarding [your specific demand].”

If their response indicates that your claim has more serious legal problems than you realized, this is a signal that you should consult with a lawyer before responding further. Don’t try to dig yourself out by sending another AI-generated response – you’ll likely make things worse.

If their response is dismissive but doesn’t actually address your legitimate factual claims or contractual arguments, you may need professional help crafting an effective follow-up. Sometimes recipients’ lawyers will try to intimidate DIY claimants by being overly aggressive about minor technical errors, hoping you’ll go away. A lawyer can assess whether their response is substantive or just tactical posturing.

Remember that a demand letter is just the opening move in a potential dispute. Errors in your letter are embarrassing and can weaken your position, but they don’t necessarily doom your claim if you have legitimate facts and contract language on your side. The question is whether you can recover from the initial misstep effectively.

Is there a better way to use AI in disputes without these risks?

Yes, absolutely. The most effective use of AI in legal disputes is as an organizational and drafting assistant, not as a substitute for legal judgment.

Here’s a workflow that works much better than “ask ChatGPT to write a demand letter”:

Step 1 – Use AI to organize your facts: Have ChatGPT help you create a comprehensive timeline of events, organize your documents, and identify what evidence you have and what you might be missing. This is AI at its best – helping you think through and structure information.

Step 2 – Draft your story in plain language: Write out what happened in simple, chronological, factual terms without trying to sound “legal.” Just tell your story with dates, amounts, and what was promised vs. what was delivered. AI can help you organize this into clear paragraphs.

Step 3 – Identify your key documents: Pull together your contract, emails, invoices, screenshots, and any other supporting documents. Have AI help you create a simple index or summary of what each document shows.

Step 4 – Define your goal: Be clear about what you actually want. Not “justice” or “to be made whole,” but specific, measurable outcomes: “$X refund,” “release of $Y in held funds,” “correction of [specific false statement],” etc.

Step 5 – Assess your realistic next step: What are you actually prepared to do if they ignore your demand? Small claims? Arbitration? Report to a regulator? Be honest with yourself.

Step 6 – Review your contract carefully yourself: Read the actual contract or terms of service. Look for arbitration clauses, notice requirements, limitation of liability provisions, and dispute resolution procedures. Make notes.

Step 7 – Now either write a simple letter yourself or get professional help: With all this preparation done, you can either write a straightforward, fact-based letter yourself (avoiding legal citations and complex arguments), or you can provide all this organized information to a lawyer who can turn it into a properly crafted demand letter much more efficiently than if you’d come to them with a disorganized mess.

This approach uses AI where it genuinely helps (organization, structure, clarity) while keeping the legal strategy and judgment in human hands where it belongs.

Many lawyers, including myself, are actually happy to work with organized, AI-assisted client presentations because it means I can focus on legal analysis and strategy rather than spending hours helping clients organize basic facts and documents. The result is usually faster turnaround and lower cost for the client.

What about using Claude or other AI tools instead of ChatGPT?

All current AI language models, including Claude, GPT-4, Gemini, and others, share the same fundamental limitations when it comes to legal work: they predict plausible-sounding text based on patterns, but they don’t actually understand law, cannot verify facts, and cannot exercise strategic judgment.

That said, different AI tools do have somewhat different tendencies in terms of the types of errors they make:

Claude (which I am, so I can speak to this) tends to be somewhat more conservative in legal claims and less likely to invent citations than some other models, but still hallucinates legal content and can confidently state incorrect legal conclusions. Claude may also be more likely to acknowledge uncertainty, though this varies.

GPT-4 and ChatGPT are widely used and quite good at generating fluent, professional-sounding text, but they’re also prone to confident hallucinations of statutes, cases, and legal standards.

Other models like Gemini, LLaMA-based tools, and specialized legal AI products each have their own characteristics, but none of them eliminates the need for careful human review and verification.

The audit process described in this article applies regardless of which AI tool you used to generate your draft. The fundamental problems – factual errors, hallucinated citations, strategic misjudgments, and tone issues – can occur with any AI system.

For demand letters specifically, the tool matters less than the process. What matters is that you verify every factual claim, check every legal citation, ensure the letter aligns with your contract and jurisdiction, and calibrate the tone and strategy appropriately.

Some legal professionals are experimenting with specialized legal AI tools that are designed to be more reliable for legal research and drafting, but even these require verification and should not be used unsupervised for important legal communications.

How do I know if my situation is too complex for a self-audited AI letter?

This is one of the most important questions, because it requires you to honestly assess both the complexity of your situation and your own competence to evaluate legal issues.

Here are some indicators that your situation is probably too complex for DIY:

You don’t fully understand the contract or legal basis for your claim: If you’re not entirely clear on why you think the other party is legally obligated to do what you’re demanding, or you’re relying on “it just doesn’t seem fair” rather than specific contractual language or clear legal violations, you need professional help understanding whether you even have a viable claim.

The contract is more than 5 pages of dense legal language: Consumer contracts with straightforward refund policies or simple service agreements may be navigable. But if you’re dealing with complex commercial agreements, technology contracts, partnership agreements, or anything with extensive defined terms, representations and warranties, indemnification clauses, and limitation of liability provisions, you need professional contract analysis.

Multiple parties or entities are involved: If you’re not sure whether you should be making demands against Company A, Company B, or both, or if there are parent companies, subsidiaries, or affiliated entities involved, jurisdiction and party identification issues require professional analysis.

The facts themselves are disputed: If the other side is likely to deny that key events occurred, or if your case depends on proving what someone’s intentions or state of mind was, you’re in territory where legal concepts like burden of proof, evidence, and credibility matter a lot. These situations benefit from professional strategy.

Prior communications have been hostile or involve threats: If the other party has already threatened to sue you, or if there’s been hostile back-and-forth, or if lawyers have already been mentioned, you should not proceed with a DIY demand letter. The situation has escalated beyond simple dispute resolution.

The amount in dispute is significant relative to your resources: This is individual-specific. For some people, $1,000 is significant. For others, $10,000 is not. But if losing would materially affect your finances, or if the dispute involves your business’s survival, that’s complex enough to warrant professional help regardless of the legal issues involved.

You’re being asked to sign or accept something in response: If their response to your demand includes a settlement offer that requires you to sign a release, indemnification, or other agreement, do not sign without professional review. These documents often include provisions that are far more consequential than just resolving the immediate dispute.

Time pressure or deadlines are involved: If you’re up against a statute of limitations, a contractual deadline for filing arbitration, or some other time-sensitive situation, mistakes can be irreversible. Don’t experiment with DIY in these circumstances.

You’re hoping to establish precedent or create leverage for other cases: If this dispute is one of many similar situations, or if you’re hoping to create a record for a pattern-and-practice claim, or if there are broader strategic considerations beyond just this immediate dispute, you need professional guidance on how to position your demand letter.

The honest test is this: If someone asked you to explain your legal theory and walk them through exactly what law or contract provision supports your demand, could you do it clearly and confidently? If not, your situation is probably too complex for a self-audited AI letter.