I had a potential client call me the other day, looking to recover $5,000 from a commercial tenancy gone bad. I explained to him my rates. I could tell that the cost-benefit analysis did not compute. So, he asked for a lower-priced option: writing a demand letter on our paralegal firm stationary. “Perhaps we can just scare her into paying the money?”

That’s when I did the cost-benefit analysis for the potential client; it does not compute.

The days of shame over having and carrying debt over time are long over. In fact, more and more businesses and people are willing to walk away from their debt, leaving creditors in the lurch. One can just peek over the Canada-U.S. border and see the example of Donald Trump. His companies have filed for Chapter 11 bankruptcy not just once, but four times! How did it affect Donald Trump? He’s in a bizarre presidential campaign as the Republican nominee, largely disavowed by the GOP.  However, he is hailed by his backers as a great business man.

Sure, I can write the demand letter, send it off to the debtor and just collect the money. But it doesn’t work. Not on its own.  When you are making a legal threat, you need to back it up with a true consequence that you must be ready and willing to back up with action:  a plaintiff’s claim.  For this tactic to work, you have to push the debtor to a different place; from, “You want my money?  Get in line,” to “Here’s your money!  Leave me alone!”  The pain of going to court is more significant to debtors than it is to walk away and do nothing.

There is a certain practice area that some lawyers have perfected this technique.  These are the lawyers that send demand letters on the behalf of department stores that catch shoplifters.  The store catches the shoplifter.  The pain-point is created:  a criminal charge leading to a criminal record.  After some time, but within the limitation period, a letter is sent to the thief demanding to be recompensed for the costs of maintaining security at the store.  The pain and shame of the criminal charge is overwhelming to the vulnerable shoplifter.  They are already primed to make the issue go away.  Some lawyers have added the tactic of preparing a draft plaintiff’s claim that has not been filed with the court.  The results are stunning.

That is why I advise my clients that if they are in for a penny, they should also be in for a pound.

If you have a legal matter within the jurisdiction of the Small Claims Court, please click on this link to my Contact Page or check out my podcast series:  The Ontario Small Claims Court Podcast.