Binds you to arbitrate instead of litigate. Demand letters must threaten arbitration, not court filings. Costs up front but quicker resolution.
Gives you choice. Demand letter can leverage both litigation and arbitration options.
Require good-faith mediation before any formal action. Skipping this gives the other side an easy procedural defense.
Executive negotiation → mediation → arbitration. Each step has timelines; your letter should document compliance with the current stage.
Specify venue and governing law. Location affects leverage, travel cost, and local counsel advantage.
Exceptions for IP, injunctive relief, small claims, or class actions. Know when you can bypass arbitration.
Filing fees + arbitrator rates can exceed small claims. Use fee-shifting provisions offensively: show cost exposure if they lose.
Invoke mediation clauses early. Propose mediators/dates to show compliance and create pressure.
Trigger each step explicitly (executive talks, mediation, arbitration). Document timeline to prevent stalling.
If forum favors you, highlight it. If not, consider offering alternative venues to encourage settlement.
Identify when you can go to court despite arbitration (IP, injunctive relief, small claims). Mention these selectively.
Waive class actions? Demand letters should focus on individual claims, but note cumulative risk if many arbitrations follow.
Toggle what’s in your ADR clause:
Arbitration version: “Our Agreement requires binding arbitration under the AAA Commercial Rules in Los Angeles. If we cannot resolve this dispute within 10 days, we will file a Demand for Arbitration with AAA seeking $150,000 plus recoverable fees per Section 14.” Mediation-required version: “Section 11 mandates good-faith mediation before any further action. We propose mediating with JAMS and are available on [dates]. Please confirm your availability within 10 days so we can comply with the contract’s procedure.” Tiered clause version: “This letter initiates Step 1 (executive negotiation) under Section 12. If we can’t resolve this within 30 days, we’ll proceed to mediation as required, followed by arbitration if necessary.” Carve-out reference: “While disputes generally go to arbitration, Section 16 allows either party to seek injunctive relief for IP misuse. We reserve that right while pursuing arbitration for damages.”