On Ethics

by David McGowan

David McGowan
Durie Tangri

Lawyers make threats on behalf of clients all the time. A recent conviction in a well-publicized case (United States v. Avenatti, S.D.N.Y. Cr. No. 1:19-cr-00373-PGG) poses the question of how the law distinguishes permissible from unlawful threats, and what practical risk threats may pose.

The rules of conduct impose few direct restrictions on threats. California Rule of Professional Conduct 3.10 forbids threats to present criminal, administrative, or disciplinary charges to obtain advantage in a civil dispute.  (The ABA Model Rule does not contain this restriction—a deliberate omission. See ABA Formal Op. 92-363 (1992).)  In cases where a lawyer engages in misconduct, Business & Professions Code 6090.5 and Rule 5.6(b) make the related point that one may not either offer or agree not to report the lawyer’s misconduct as part of a settlement. But Rule 3.10 does not apply to threats to file a civil action (cmt [2]), or to the actual reporting of misconduct to a criminal or regulatory authority. Rule 3.1 indirectly constrains threats by forbidding the filing of a civil claim without probable cause and for the purpose of harassing another. This conjunctive requirement is not particularly restrictive. Lastly, Rule 8.4(b) may come into play if a threat qualifies as a criminal act sufficient to call into question a lawyer’s fitness to practice. Taken together, the Rules provide only a little clarity. If counsel for an employer responds to the wage demand of an undocumented employee by threatening to report the employee to immigration authorities, for example, that person is subject to discipline.

The Anti-SLAPP provisions of C.C.P. Section 425.16 et seq. include another potentially relevant source of law. The provisions become relevant if someone on the receiving end of a threat sues the lawyer making it for, by way of example, extortion. The statue is applied via a two-step inquiry, which asks if the complaint aims at protected activity and, if so, whether the plaintiff can show they are likely to prevail. Section 425.16(e)(2) identifies statements made in connection with judicial proceedings as a type of protected activity, and this provision may extend to threats in demand letters. However, Flatley v. Mauro, 39 Cal. 4th 299 (2006), holds that demand letters that are themselves unlawful are not protected under Section 425. That ruling makes relevant the elements of expression-based crimes, such as extortion. The Penal Code defines extortion to include a threat under Section 519 of that Code, which makes it a crime to threaten to: accuse a person or a relative or family member of a crime; expose them to disgrace; expose a secret affecting them; or to report actual or suspected immigration status. The Flatley Court held an extortionate demand letter fails to qualify for anti-SLAPP protection at step one of the analysis. Cases such as Oasis W. Realty, LLC v. Goldman, 51 Cal. 4th 811 (2011), show that constraints on lawyers may be relevant at step two of the analysis as well, as when the expression at issue plausibly violates a duty of confidentiality owed to a former client.

The litigation privilege is also a relevant source of law. Based in Civil Code Section 47(b), the privilege exempts from liability, other than for malicious prosecution, expression that has some connection or logical relation to an action filed or contemplated in good faith and which is made to advance that connection.  Silberg v. Anderson 50 Cal.3d 205, 212 (1990); see also Restatement (Third) of the Law Governing Lawyers Section 57(1). A threat not made in good faith is not protected by the litigation privilege. Action Apartment Assn., Inc. v. City of Santa Monica, 41 Cal. 4th 1232, 1251 (2007). Where a threat does not satisfy each element of a crime, such as extortion, it may both be protected activity for purposes of anti-SLAPP analysis and subject to the litigation privilege. E.g., Malin v. Singer, 217 Cal. App. 4th 1283 (2013). Conversely, under Flatley, an extortionate communication might fall within the privilege but not be protected for purposes of step one of the anti-SLAPP analysis. 39 Cal. 4th at 320-325.

Some doctrines may be implicated by a threat, depending on the accompanying demand. A threat to expose misconduct unless hired to do an internal investigation could implicate Rule 5.6(a)(2)’s prohibition on agreements restricting a lawyer’s right to practice, for example, because the lawyer’s agreement to represent the threatened party would turn that party into a client, to whom the lawyer would owe a duty of confidentiality (among others), which in turn would restrict the lawyer from bringing cases based on the misconduct in the future. Such proposals create conflicts by giving lawyers a personal stake in a settlement, and they create disciplinary risk whether offered or demanded. And in some circumstances, basic contract law doctrine may provide a defense to a settlement achieved by a threat. The threat would have to qualify as improper under the standards of Restatement (Second) of Contracts Section 176, and be one that left the threat recipient no reasonable alternative but to acquiesce. Id. Section 175. Defending the threatened claim would typically count as a reasonable alternative, but not always.  

More practically, in an age when it is hard to shock people, an overt threat to bring a claim may sound worse than the substance of the claim itself.  Civil litigators may become inured to threats, but not everyone has the same reaction. Many judges, and most jurors, will not be so inured. Particularly if, in the heat of a moment, a threat slips outside the rules discussed above, such reactions are the final practical, if informal, constraint.

David McGowan is a partner at Durie Tangri LLP as well as the Lyle L. Jones Professor of Competition and Innovation Law and the Director of the Center on Intellectual Property Law and Markets at the University of San Diego School of Law.  He is also a member of the American Law Institute.