Letters Before Action – not just a steppingstone to litigation but a useful tool to avoid a costly court dispute

Before starting litigation through the issuing of proceedings, the court will generally expect a potential claimant to have conducted themselves in accordance with the Practice Direction on Pre-action Conduct and Protocols. Whilst there are specific protocols for each type of claim, the overarching and consistent theme is that the first step in any sort of litigation, is a Letter Before Action (LBA). Whilst litigators often see this as a box ticking exercise before resorting to litigation, the below case study illustrates that a well thought out and structured LBA can avoid a lengthy and timely court battle.  

The purpose of an LBA, also known as a Letter of Claim, is to 

1. understand each other’s position 
2. make decisions about how to proceed 
3. try to settle the issues without proceedings 

Occasionally, we find that clients are reluctant to spend the time, and money, in having a formal LBA prepared. This is normally because extensive correspondence has already gone between the parties (prior to our instruction) and there was no common ground or resolution achieved. Understandably in those circumstances, there are doubts as the potential benefit of an LBA as against simply issuing proceedings and forcing a resolution through the courts.   

This was certainly the position that a client found herself in recently. A sole trader, up against a large corporate landlord. It was the epitome of David & Goliath. Upon taking instructions, it was clear the client had a strong triable case. However, a review of the initial correspondence demonstrated a lack of particularity and as a result, a skewed understanding (on the potential defendant’s perspective) of the proposed claim.   

Despite being intent on issuing proceedings, we encouraged the client to allow us to draft a formal LBA in the first instance. Alike most clients in such circumstances, the client’s ideal was to have an aggressive and accusatory LBA, threatening proceedings in the absence of payment.  

The eventual LBA was neither of those things; it didn’t need to be – it was robust but factual and precisely set out the basis of our clients claim together with the damages sought.       

Three weeks after the same was dispatched, we received a 5-figure cheque in settlement of the client’s proposed claim, the monies having been paid in full without any set-off.  

While the above case study is a rarity as opposed to the norm, it demonstrates how a well-considered and structured LBA can avoid the time and costs of extensive litigation. Despite popular opinion, the issue of proceedings is always a last resort for lawyers. The outcome of litigation is never a certainty, even with the most ironclad claim. As such, an out of court solution is always the preferred route and as demonstrated by the above, an LBA should not be viewed as simply a procedural requirement/steppingstone to litigation – it is a very useful tool in facilitating resolution.