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Updated January 23, 2023. Sending a demand letter is a way to escalate a dispute.A demand letter is a document that gives notice requesting compensation or to right a wrong for a previous action. The first step to resolving a dispute without going to court can be writing a demand letter. Your first step in filing a small claim. A demand letter is the layperson's version of a legal complaint. A demand letter is an effective way of completing this requirement. A demand letter can help you better organize your case. Your letter must encourage your opponent to assess the entire situation in a professional and businesslike manner. This is your one stop shop for everything settlement demand letter related.