What happens when someone threatens me with legal action in a commercial dispute?

If the person has put their threat in writing (in the form of a letter or another document), you should take it seriously. Keep the document for future reference – do not throw it away or lose it. Threats of legal action usually specify a deadline date for either a response or payment before the other party will begin court proceedings. It is advised that you respond in writing before the deadline, even if you deny the claims. This is your best opportunity to minimise damage and the best time to take legal advice. What you say in your first response may be held against you.

The other party may issue proceedings if they believe they have a legal basis for their claim, whether you respond or not. At this point, your potential liability to pay their legal costs begins to accrue. You should consider all allegations carefully and decide whether you wish to try for a settlement, ideally prior to the start of the proceedings. Again, there are special rules and considerations that apply to settlement offers and negotiations and an experienced litigation solicitor would add real value at this stage.

If you consider the claim unreasonable or unjust, but are not sure how to defend yourself, seek legal advice as early as possible. A solicitor can advise you on the merits of your case and devise a strategy for resolution. They can also give you an idea of the potential costs you may have to pay the other side if you lose.