One badly written letter from a company can ruin the reputation of hundreds of employees.
TRUE STORY
Today, we received a reply to our Letter of Demand from a company, signed off by one of its directors. It was poorly drafted, unnecessarily offensive and overall dodgy.
Naturally, after receiving such letters I did a little due diligence on the company thinking it might be a sham company. To my surprise, it had over 200 employees and some years of standing.
Over at LinkedIn page, I was free to browse some of the profiles of the employees including some reputable faces, all the while perplexed at how these people have become hires of the said company.
Obviously, the event had left a pretty bad impression on me.
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In my day-to-day operation in the legal service industry, I come across quite a number of companies that reply to legal letters (more commonly known as “Letters of Demand” or “Notice of Demand“) without first seeking professional guidance. Why such companies choose to do so may be in part due to (a) lack of appreciation for the legal services or over-estimation of one’s abilities (thinking that anyone can do just as much if they can read and write the language); (b) lack of financial resources to engage a lawyer to draft a reply; (c) “penny wise pound foolish” reasons or (d) simply perhaps they suffer from the Dunning-Kruger effect of “you don’t know what you don’t know”.
PROBLEMS WITH THE DUNNING-KRUGER EFFECT
The repercussions of replying to a legal letter without seeking legal advice is often more damaging than one might imagine:
1. Self-incrimination. The lack of appreciation of the law and legal procedure can lead a layman to say things that are self-incriminating. A letter of demand is often used in court later as evidence of the party’s intention/conduct. Thus, if you were being sued for RM100,000 in the letter of demand, and you reply “I didn’t pay you the RM100,000 because someone else didn’t pay me” might sound like a genuine explanation of the debt, but it is also an admission of liability towards the existence (and quantum) of the debt, halfing of course your opponent’s efforts to get a court order against you.
As an example, in the case of LIM WEN-CHIH v PACIFIC FOREST INDUSTRIES SDN BHD & ANOR [2020] MLJU 2336, the Court of Appeal found that the following letter issued by the layman Defendant in reply to a letter of demand issued by the Plaintiff’s solicitors was an acknowledgment of the debt owing by the Defendant to the Plaintiff.
2. Omissions become Admissions. Selectively addressing some contents of the letter while disregarding the others and without including the usual disclaimers such as “without admission to any liability”, can also leave room for argument as to whether ‘unaddressed’ means ‘undisputed’.
3. Impulsive Responses. And of course having a third party to draft reply letters prevents one from making emotional, irrational or incompetent replies that tarnishes the reputation of not just the person signing the letter but the entire organization it represents.
MORAL OF THE STORY
With all the perils of a poorly drafted letter, it is always best to get an in-house counsel or a lawyer to draft a proper reply even if it might cost a couple hundred dollars. Thinking that one could reply to seemingly simple and preliminary letters and then bring in the lawyers “at the later stage” is like getting vaccinated after catching the virus. Knowing what you don’t know is key to making informed decisions.