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In what could turn out to be one of the most spectacular legal scandals of the past two-weeks, BigLaw firm Boies Schiller, which will likely never wash the Theranos stink off of it, was outed as the firm that narced on Avenatti to the U.S. Attorneys office for allegedly attempting to “extort” a settlement out of Nike.
Apparently, as many lawyers are likely deducing, the lawyers at Boies, despite the reputation for being aggressive and using intimidation tactics to get what they want, couldn’t take the heat Avenatti was dishing out, and turned to the authorities for help. Rather than work on creatively solving the legal problem, the attorneys pursued the bold tactic of attacking the attorney on the other side, and potentially destroying their own credibility at the same time.
But Didn’t Avenatti Do Something Wrong?
While the charges against Avenatti filed in New York federal court (rather than the Calilfornia-filed federal charges) may make the popular lawyer look sleazy to the public, one really has to wonder what the BigLaw firm’s endgame was, and whether these charges have any chance of actually sticking. After all, the information Avenatti threatened to go public with is now going public, and Nike is left to defend itself.
Additionally, while the terms of Avenatti’s demand may have been unusual, from what we’ve seen thus far, nothing really seems like criminal extortion. Avenatti may have used some brash language, but just because a lawyer uses the f-word that doesn’t make a demand extortion. Nor does demanding exorbitant sums of money, or explaining that the information will go public and hurt the defendant company’s bottom line. Curiously absent from anything the public has seen is Nike engaging in a good faith settlement negotiation. Where was Avenatti supposed to start for his client?
Even the offer to conduct Nike’s investigation, while a potential clear conflict of interest, is clearly a waive-able conflict.
What’s the Problem Boies?
Boies Schiller and the U.S. Attorneys might know more than the rest of us, but from what the public has seen at this point, particularly legal consumers and other lawyers, Boies can’t be coming off looking good here. Sure, Avenatti is in some serious trouble, but this drama with Boies and Nike is basically a comic aside to the charges out of California, which actually seem legit.
Not only did Boies narc on a hard-negotiating attorney with a claim against their client, they allowed presumably confidential settlement negotiations to be secretly recorded by the authorities. Their involving the authorities over a failure to communicate, rather than just fighting it out on the merits, is a seriously questionable tactic because it doesn’t address the merits of the potential claim at all, and is likely to have a massive chilling effect on other attorneys being willing to negotiate with the firm’s lawyers. Chilling settlement negotiations could be a big problem for the clients of any law firm, as clients end up footing the bill when other attorneys don't want to negotiate with the firm they hired.