There's some kind of disagreement going on about something. How do the people on the other side of the dispute tend to react to such a letter, spelling out their view of how the law favors you in this dispute?
The theory is that this is going to benefit you because the people who receive the letter will see that they are in the wrong and now they will comply with what you think is right.
I don't know very much about this because I'm not an attorney. But what I see is situations where one attorney's letter is answered with another attorney's letter and everybody feels threatened and there's either a tense stalemate or ocassionally a law suit that gets filed.
When you have a problem with somebody else's behavior or actions, what you want is to keep the conflict productive by getting as fast as possible to some kind of communication where you can hear what matters to them and why, and they can hear what matters to you and why.
An attorney's letter puts the receiver on the defensive. She may comply with the demand, out of intimidation or shame. But one thing seems likely: dialogue and discussion now seem pointless.
An attorney's letter sometimes is a backdoor way of avoiding the conflict: you hand it over to the attorney. The attorney typically says let me do the talking from now on. It's out of your hands. You get the strong advocate on your side, true. But you don't know for sure how the other side will react.
My conclusion: the law isn't good for resolving conflict. As the great mediation author Kenneth Cloke says in Mediating Dangerously: The Frontiers of Conflict Resolution, the law is designed to contain and control conflict, not resolve or transform it.