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So, is that an “Extortion Demand” or are you Just Glad to See me?

In 2001, attorney Mary Roberts had sex with four men after discovering the affair of her husband, attorney Ted Roberts. The couple reconciled and Mr. Roberts sent demand letters to the four men—a lawyer, an accountant, and two chief financial officers—threatening to file petitions for rule 202 depositions about their sex with his wife.  Or, if they preferred, they could avoid the depositions by “making him whole.”

The men paid a total of $115,000 to the couple. They also called the authorities. And both Mr. Roberts and his wife ultimately were indicted and convicted of multiple counts of theft by coercion and deception. Both convictions were upheld on appeal.

Last week, Michael Avenatti was indicted for extortion in connection with demands he made on Nike in his representation of the coach of a youth basketball team that had lost Nike sponsorship. He demanded from Nike $1.5 million for the client and around $22 million for himself.

So, when does your demand letter cross the line and become evidence of extortion or theft by coercion? Is this just a “know it when we see it” situation? Well, the exact line may not clear, but there are certainly some red-flag guidelines. To paraphrase Jeff Foxworthy, ….

  • Does your demand letter threaten a claim that doesn’t exist? If it does, you may be an extortionist.

 

  • Does your demand letter threaten a claim that you purposefully structured? If it does, you may be an extortionist.

 

  • Does your demand letter contain known falsehoods rather than the truth? If it does, you may be an extortionist.

 

  • Does your demand letter seek a benefit for you instead of your client? If it does, you may be an extortionist.

 

  • Does your demand letter threaten a press conference or bad publicity if your demands are not met? If it does, you may be an extortionist.

 

  • Does your demand letter demand far more money than your client’s claim is worth? If it does, you may be an extortionist.

 

  • Does your demand letter justify the demand based on losses you will cause through adverse publicity as opposed to your client’s losses? If it does, you may be an extortionist.

 

  • Does your demand letter mention ruining reputations if your demands are not met? If it does, you may be an extortionist.

 

  • Does your demand letter focus on adverse publicity you will cause instead of on your client’s claim and losses? If it does, you may be an extortionist.

 

  • Does your demand letter suggest that they hire you as their attorney to avoid all this mess? If it does, you may be an extortionist.

 

  • Does your demand letter promise secrecy or confidentiality if they will pay your demand? If it does, you may be an extortionist.

 

  • Does your demand letter promise you will go away and take no more cases against them if they pay your demand? If it does, you may be an extortionist.

Probably no one factor, standing alone, converts your demand letter into Exhibit 1 in a criminal trial for extortion. And there is certainly nothing wrong with a lawyer referencing in a demand letter or settlement discussions the real-world public relations consequences of refusing your client’s reasonable settlement offer. So where is the line? Extortion claims against lawyers are rare, so it is worthwhile to look at the facts of cases where lawyers have been indicted for guidance.

In the case of the Robertses, the couple had reconciled, the wife had confessed her adultery and the husband had emails documenting the affairs, so the deposition served no purpose other than to harass and embarrass the four men. And Ms. Roberts apparently cooperated with the assertion of the claim against her former lovers and may have even helped plan the demand.

In the case of Michael Avenatti, he demanded that Nike retain him to do an internal investigation on amateur player recruiting—for a fee of $15 – $25 million. Alternatively, Nike could just pay him $22 million and make the whole thing go away. Refusal to meet his demands would, according to Avenatti, result in a press conference that would destroy Nike’s reputation and sink its stock price.

Somewhere in these two cases there should be enough guidance for lawyers to represent their clients zealously while still keeping a safe distance from the cliff that separates an appropriate settlement offer from an extortion demand.