For plaintiff lawyers, it’s a common and annoying refrain, every civil defendant thinks and feels like every demand letter is basically extortion.
Yes, whenever a person or business has to pay up or face litigation and associated public condemnation, it can seem like a damned if they do, damned if they don’t situation, but that’s just the legal system. And let’s face it, it’s better than the lack of a legal system. And with all this business about attorney Michael Avenatti facing extortion charges for his unusual demand to Nike, it’s a good time to look at when demands do, in fact, constitute extortion.
Threatening Defendants to Pay Up for Criminal Acts
The big thing that attorneys need to be careful about when making demands in cases that involve criminal activity is to not tie any proposed settlement demand to any criminal prosecution or report to the police. Generally, threatening to report illegal conduct to the authorities isn’t extortion or unethical, until it’s coupled with a demand for payment in exchange for not doing so.
Additionally, if the demand threatens to publicly expose a defendant’s private actions in any other forum besides a court of law, the demand can quickly run afoul and potentially qualify as extortion, even if what will be revealed is true. Furthermore, as outlined in the Daily Journal, context can matter big time as even if the express language used doesn’t constitute extortion on it’s face, when taken in context, the exact language might not matter as much.
While there are laws that protect communications made in the course of settlement negotiations, that privilege does not extend to demands that constitute extortion. In cases where civil settlements are sought for what is also criminal conduct, demands can get rather murky, particularly prelitigation, or prior to contacting law enforcement.
In short, the lesson for attorneys is to avoid threatening law enforcement action and public humiliation in demand letters. Defendants generally know that if they settle a civil case that has criminal law or public relations issues underlying it, that those issues