How should I handle a legal letter or threat against my startup?
By SuLe · Updated 9 May 2026
Don't ignore it and don't reply in anger — those are the two mistakes that turn a manageable threat into a real problem. Note the deadline, preserve every relevant document, check whether an insurance policy responds, mind "without prejudice" rules, and get your reply drafted or reviewed before it goes out.
Key facts
- Ignoring a legal letter has real consequences — deadlines and costs penalties are not idle threats.
- Preserve all related documents and emails immediately; do not delete anything.
- Check D&O, cyber and professional indemnity insurance — they often cover defence costs but require prompt notification.
- "Without prejudice" correspondence is generally protected from being shown to a court; label and use it carefully.
- For IP threats, the Intellectual Property (Unjustified Threats) Act 2017 can make an overreaching threat actionable against the sender.
What should I do in the first 24 hours?
Slow down and do the boring things well. Read the letter carefully, identify exactly what is being alleged and what is being demanded, and diarise any deadline — a letter before claim, for instance, will usually give you a fixed window to respond.
Then preserve everything: emails, contracts, files, messages, anything touching the dispute. Do not delete or "tidy up" documents, which can look like destroying evidence and make a bad situation far worse.
What you should not do is reply immediately in anger. An emotional, off-the-cuff response can concede facts, waive protections, or hand the other side ammunition. A short holding acknowledgement is fine; a heated rebuttal is not.
Can I safely ignore it?
No. Ignoring a legal threat is one of the most expensive things a founder can do. Deadlines run whether or not you engage, and courts expect parties to follow the Pre-Action Protocol before litigating.
Failing to respond to a proper letter before claim can lead a court to penalise you on costs later, even if you had a decent defence. Silence is read as either weakness or contempt for the process — neither helps you.
Even where you are confident the claim is baseless, the right move is a measured, on-the-record response that says so, not silence. Engagement protects your position; ignoring it forfeits it.
Should I check my insurance?
Yes — early, and before you spend on your own defence. Several common policies respond to legal threats: directors' and officers' (D&O) insurance, professional indemnity, and cyber cover can all pay defence costs.
The catch is notification. These policies typically require you to notify the insurer promptly once a claim or circumstance arises, and missing that window can void cover entirely. So checking your policies is an early task, not an afterthought.
If a policy responds, the insurer may also help direct the defence and appoint solicitors, which can materially change your strategy and cost. Do not settle or admit anything before you know whether you are insured.
What if the letter is about intellectual property?
Tread carefully, because IP threats cut both ways. If someone accuses you of infringing a patent, trade mark or design, an aggressive or unjustified threat may itself be actionable against them under the Intellectual Property (Unjustified Threats) Act 2017.
That does not mean you should be reckless — but it does mean an overreaching threat you receive is not automatically the last word, and may be challengeable.
It also means any threat you send needs to be measured and well-founded. Fire off a sweeping infringement threat of your own and you could hand the recipient a claim against you. This is an area to get advice before writing anything.
| Do | Don't |
|---|---|
| Note every deadline in the letter | Ignore it or let deadlines slide |
| Preserve all documents and emails | Delete or alter anything |
| Check and notify relevant insurance promptly | Assume you're uninsured and pay out of pocket |
| Use "without prejudice" for settlement talks | Concede facts in an angry open reply |
| Get the response drafted or reviewed | Send a heated response the same day |
Worked example
Kwame runs a solo consumer app and receives a stern letter from a larger company alleging his brand name infringes their trade mark, demanding he rebrand within 14 days.
Kwame resists the urge to fire back. He diaries the 14-day deadline, saves the letter and all his branding files, and checks his insurance — his policy may cover IP defence costs, so he notifies the insurer at once. He then has a considered response prepared, noting that an unjustified trade-mark threat can itself be actionable under the 2017 Act, and asking for the basis of the claim. The measured reply buys time and shifts the tone from ultimatum to negotiation.
Where founders go wrong
Ignoring the letter
— deadlines run regardless, and non-engagement can cost you on costs even with a good defence.Replying in anger
— an emotional open reply can concede facts and waive protections you'll wish you'd kept.Missing the insurance notification window
— prompt notice is often a condition of cover, and lateness can void it.Sending your own overreaching IP threat
— an unjustified threat can be turned into a claim against you under the 2017 Act.
Related questions
What should I do first when a legal threat arrives?
Don't ignore it and don't fire back in anger. Note any deadline, preserve every related document and email, check whether an insurance policy covers it, and get the response drafted or reviewed before you send anything. A calm, considered reply beats a fast, emotional one.
Can I just ignore a letter before claim?
No. Ignoring it has real consequences — deadlines pass, and a court can penalise you on costs for failing to engage with the Pre-Action Protocol. Even if you think the claim is baseless, you generally need to respond, on time and on the record. [More: A customer won't pay an invoice — what are my legal options?]
Does my insurance cover legal threats?
Often, but only if you notify promptly. Directors' and officers' (D&O), professional indemnity and cyber policies frequently cover defence costs and require early notification. Missing the notification window can void cover, so check your policies as soon as a threat arrives.
What if the threat is about intellectual property?
Be careful on both sides. The Intellectual Property (Unjustified Threats) Act 2017 can make an overreaching IP threat actionable against the party who sent it. So an aggressive threat you receive may be challengeable — and any threat you send needs to be measured. [More: What should I do if a competitor is using our confidential information?]
The first response to a legal threat often decides how the whole dispute goes — and it is exactly the moment founders are most tempted to react emotionally. A SuLe solicitor can assess the threat, check your insurance position, and draft a response that protects you without escalating. Book a free consultation about your situation.
Keep reading: A customer won't pay an invoice — what are my legal options? · What should I do if a competitor is using our confidential information? · What happens if we breach an investment warranty? · What can I do if someone copies my product or brand? · Are NDAs enforceable in the UK — and are they worth it?
Primary sources: GOV.UK — Make a court claim for money · Intellectual Property (Unjustified Threats) Act 2017
