Insight

IN PARTNERSHIP

Don’t Cross the Line

Settlement negotiations tend to instigate the most zealous advocacy among attorneys. But how far is “too far?”, and when can settlement demands turn into extortion?

Nike check over image of man in suit with court document in background
John R. Mitchell

John R. Mitchell and Mira Aftim

October 6, 2023 12:00 AM

Last month, Michael Avenatti―the former celebrity lawyer turned convicted felon―failed to overturn his conviction for extorting Nike and defrauding his client. According to the U.S. government, Avenatti turned a settlement demand into extortion using classic company shake-down tactics. He threatened to “blow the lid” on Nike’s alleged corrupt payments at a press conference unless the company paid his whistleblowing client $1.5 million and paid Avenatti between $15 million and $25 million for him to conduct an internal investigation into the company. Allegedly facing significant debt, Avenatti was looking to profit from his client’s situation by extorting payments for himself. Avenatti’s failed appeal reinforces the ethical tenets the legal field must abide by, as Avenatti now faces 2.5 years in prison for his extortion and honest services fraud conviction, in addition to the 16.5 years for other fraudulent crimes that were later discovered.

While Avenatti’s actions may seem like a cut-and-dry case of wrongdoing, many attorneys have found themselves in the limelight for not so easily discerned cases.

What is Extortion or Blackmail?

Federal extortion law prohibits anyone who demands or receives money, or any other valuable thing, under the threat of informing or as consideration for not informing, against any violation of U.S. law. State laws generally follow this pattern but also prohibit a wider variety of extortion-related activity.

What are the Ethical Rules?

Many states―like California, Washington D.C., Louisiana, Ohio, Colorado, Louisiana, Connecticut, Massachusetts, Texas, Illinois and Florida―have professional conduct rules barring attorneys from seeking, or threatening to seek, criminal charges or disciplinary charges solely to obtain an advantage in a civil matter. While this rule may seem straightforward at first, its application is not always clear.

Recent Settlement Demand Gone Wrong

In 2022, California attorney Amy Mousavi found herself in a similar situation as Avenatti.[1] While representing a former employee of Falcon Brands, Inc. (“Falcon”), she sent aggressive emails to the company attempting to settle the client’s employment dispute.

In her first email, Mousavi requested documents from Falcon, but after no reply, she sent a second email offering to settle the claims for $490,000 and threatening to contact Harvest Health & Recreation Inc. (“Harvest”) if she did not receive a response about resolving the matter the next day. Harvest was a company Falcon was contemplating a merger with, so Mousavi claimed Harvest should be put on notice of the potential legal claim against Falcon.

Falcon’s counsel advised Mousavi not to contact Harvest, claiming Harvest was not yet an owner of Falcon and, as such, would not be a proper party to any claim. With no settlement agreement in place, Mousavi emailed Falcon stating:

I have put the attorneys for Harvest [] on notice about [my client’s] claim for wages, [***] without disclosing [the allegations of illegal conduct.] However, Harvest has requested that I forward the demand letters I have sent you [including the illegal conduct]. I am planning to [**] e-mail those letters on Tuesday. Please call me if you have any questions. Thanks.”

Falcon’s counsel then accused Mousavi of extortion, and in response, she stated:

I have been providing you with [an] opportunity to resolve this matter, but all I get from you are threats and evasiveness. I waited patiently to no avail. As stated, I will proceed accordingly. If you want to resolve this matter, now is the time.”

Ultimately, Mousavi sent the demand letters to Harvest, which included allegations against Falcon for engaging in illegal activity. This resulted in Harvest rescinding its merger agreement with Falcon. Mousavi then sued Falcon for her client’s employment claims, and Falcon filed cross-claims for extortion and intentional interference with a contract.

The trial court initially dismissed Falcon’s cross-claims, finding Mousavi’s threats were protected speech under the anti-SLAPP statute. However, the appellate court (the “court”) reversed the trial court and stated, “Mousavi's escalating series of threats ultimately transformed what had been legitimate demands into something else: extortion.”

While Mousavi’s initial emails did not cross the line into misconduct, the misconduct occurred when Mousavi emailed Falcon’s counsel in the first block quote above emphasized in bold. In that email, she stated she put Harvest on notice of the claims, that Harvest requested settlement demands (which included the claims of illegal conduct) and that she planned to email the demands to Harvest on Tuesday. The court found, at this point, her implication was clear: “Settle the case now, or Harvest will become aware of Falcon's alleged criminal misconduct next week.”

The court quoted the Supreme Court in Flatley, which stated, “[e]xtortion has been characterized as a paradoxical crime in that it criminalizes the making of [*] threats that, in and of themselves, may not be illegal. ‘[I]n many blackmail cases the threat is to do something in itself perfectly legal, but that threat nevertheless becomes illegal when coupled with a demand for money.’”[2]

Thus, “it is the threat to reveal damaging information, not any subsequent revelation, that makes the conduct illegal when the threat is linked to a monetary demand.”

Key Takeaway

The line between zealous advocacy and unlawful advocacy can easily be crossed. When entering into settlement discussions, do not make threats conditioned upon payment of a settlement amount. Combining even a lawful threat with the demand for money crosses into extortion territory.


[1] Falcon Brands, Inc. v. Mousavi & Lee, LLP, 289 Cal. Rptr. 3d 521 (Ct. App. 2022).
[2] Flatley v. Mauro, 139 P.3d 2 (Cal. 2006).

Headline Image: Composed by Kaia Smith; United States v. Avenatti, (S1) 19 Cr. 373 (PGG) (S.D.N.Y. Jan. 26, 2020); Adobe Stock/Nikola; Pixels/HamZa NOUASRIA; flickr/Joe Flood

Related Articles

IN PARTNERSHIP

A Beacon of Excellence in Criminal Defense


by Nicole Deborde Hochglaube

Nicole Hochglaube has built her firm and practice on fierce advocacy for her clients, and her excellence and work in Texas are highlighted through her awards and success.

People in business suits standing in a line clapping

IN PARTNERSHIP

The Law Offices of Joseph A. Simon: A Criminal Defense Law Firm


by Joseph A. Simon

The Law Offices of Joseph A. Simon is an Ann Arbor-based firm that specializes in Criminal Defense. Over his 37-year career, Joseph A. Simon has defended thousands of cases.

A Lady in a Suit Taking Notes Across from a Man in an Orange Jumpsuit at a Table

IN PARTNERSHIP

Get a Lawyer


by Anne M. Collart and Ricardo Solano Jr.

When a subpoena arrives, having counsel can save time and money and also protect your rights.

Woman with glasses reading a document

IN PARTNERSHIP

Why Refusing a Blood Alcohol Test Might Be Safest


by Charles E. Tiernan III

A seasoned criminal defense and OUI lawyer explains why refusing to take a blood alcohol test after an OUI arrest may be the safest option for the arrestee.

Gloved hand holding vial of blood for alcohol test

IN PARTNERSHIP

The Current Situation for Asylum Seekers in the U.S.


by Allison Lukanich and Murali Bashyam

The U.S. asylum system has a staggering over 1.3 million cases pending before immigration courts and the government must distribute more resources to aid this watershed and resolve asylum claims faster.

Shadow of person standing by broken chain link fence

The Impact of Plea Bargains in Criminal Cases in the U.S.


by Best Lawyers

Best Lawyers highlights why plea bargains have risen to such prevalence, quickly becoming an essential part of the criminal justice system in the U.S.

Client and attorney stand before a judge in a courtroom

Find the Best Lawyers for Your Needs


by Jennifer Verta

Discover how Best Lawyers simplifies the attorney search process.

A focused woman with dark hair wearing a green top and beige blazer, working on a tablet in a dimly

"Lawyer of the Year"


Lawyer poses for legal headshot in purple dress

Eva Davis

Corporate Law

Los Angeles, CA

2025

One of NY’s Top Personal Injury Lawyers on 2 Surprising Trends Transforming the Industry


by Gregory Sirico

Lawyer Jeff Korek talks emerging personal injury law trends in IVF litigation and trial scarcity.

Doctor consoles couple in medical office

"Lawyer of the Year"


Lawyer in suit smiles for professional headshot

Kevin M. Levy

Technology Law

Miami, FL

2025

History Eraser


by Gregory Sirico

Penguin Random House and several other major book publishing houses filed litigation against Florida education leaders who recently passed a book ban law.

Penguin logo in front of black and white books

Scarlett Law Group: Mastering TBI Trial Law


by Justin Smulison

Randall H. Scarlett shares successes in traumatic brain injury cases, fueling Scarlett Law Group's growth across Northern California with specialized insights.

Two lawyers, suited, standing in front of law firm sign

"Lawyer of the Year"


Man in suit and tie smiling for professional headshot

Dylan D. Rudolph

Litigation - ERISA

San Francisco, CA

2025

"Lawyer of the Year"


Lawyer poses for professional firm headshot

Mindi M. Richter

Copyright Law

Tampa, FL

2025

One of the Greatest Ever...


by Justin Smulison

Steve Yerrid, a top catastrophic injury lawyer, has secured over 300 verdicts of $1M+ and has been recognized as "Lawyer of the Year" multiple times in Tampa.

Lawyer in blue suit poses in office for headshot

IN PARTNERSHIP

Georgia Car Accident: How to File a Car Accident Case


by Robert Hammers

In a car accident in Georgia? Read this guide for key steps from actions at the scene to settlement talks and lawsuit filing. Stay informed and prepared.

Figure with clipboard assesses the scene of an accident

Trending Articles

2025 Best Lawyers Awards Announced: Honoring Outstanding Legal Professionals Across the U.S.


by Jennifer Verta

Introducing the 31st edition of The Best Lawyers in America and the fifth edition of Best Lawyers: Ones to Watch in America.

Digital map of the United States illuminated by numerous bright lights

Unveiling the 2025 Best Lawyers Awards Canada: Celebrating Legal Excellence


by Jennifer Verta

Presenting the 19th edition of The Best Lawyers in Canada and the 4th edition of Best Lawyers: Ones to Watch in Canada.

Digital map of Canadathis on illuminated by numerous bright lights

Legal Distinction on Display: 15th Edition of The Best Lawyers in France™


by Best Lawyers

The industry’s best lawyers and firms working in France are revealed in the newly released, comprehensive the 15th Edition of The Best Lawyers in France™.

French flag in front of country's outline

Presenting the 2025 Best Lawyers Editions in Chile, Colombia, Peru and Puerto Rico


by Jennifer Verta

Celebrating top legal professionals in South America and the Caribbean.

Flags of Puerto Rico, Chile, Colombia, and Peru, representing countries featured in the Best Lawyers

Announcing the 13th Edition of Best Lawyers Rankings in the United Kingdom


by Best Lawyers

Best Lawyers is proud to announce the newest edition of legal rankings in the United Kingdom, marking the 13th consecutive edition of awards in the country.

British flag in front of country's outline

Unveiling the 2025 Best Lawyers Editions in Brazil, Mexico, Portugal and South Africa


by Jennifer Verta

Best Lawyers celebrates the finest in law, reaffirming its commitment to the global legal community.

Flags of Brazil, Mexico, Portugal and South Africa, representing Best Lawyers countries

Prop 36 California 2024: California’s Path to Stricter Sentencing and Criminal Justice Reform


by Jennifer Verta

Explore how Prop 36 could shape California's sentencing laws and justice reform.

Illustrated Hands Breaking Chains Against a Bright Red Background

Announcing the 16th Edition of the Best Lawyers in Germany Rankings


by Best Lawyers

Best Lawyers announces the 16th edition of The Best Lawyers in Germany™, featuring a unique set of rankings that highlights Germany's top legal talent.

German flag in front of country's outline

Celebrating Excellence in Law: 11th Edition of Best Lawyers in Italy™


by Best Lawyers

Best Lawyers announces the 11th edition of The Best Lawyers in Italy™, which features an elite list of awards showcasing Italy's current legal talent.

Italian flag in front of country's outline

Tampa Appeals Court ‘Sends Clear Message,” Ensuring School Tax Referendum Stays on Ballot


by Gregory Sirico

Hillsborough County's tax referendum is back on the 2024 ballot, promising $177 million for schools and empowering residents to decide the future of education.

Graduation cap in air surrounded by pencils and money

Find the Best Lawyers for Your Needs


by Jennifer Verta

Discover how Best Lawyers simplifies the attorney search process.

A focused woman with dark hair wearing a green top and beige blazer, working on a tablet in a dimly

Key Developments and Trends in U.S. Commercial Litigation


by Justin Smulison

Whether it's multibillion-dollar water cleanliness verdicts or college athletes vying for the right to compensation, the state of litigation remains strong.

Basketball sits in front of stacks of money

Woman on a Mission


by Rebecca Blackwell

Baker Botts partner and intellectual property chair Christa Brown-Sanford discusses how she juggles work, personal life, being a mentor and leadership duties.

Woman in green dress crossing her arms and posing for headshot

Best Lawyers Celebrates Women in the Law: Ninth Edition


by Alliccia Odeyemi

Released in both print and digital form, Best Lawyers Ninth Edition of Women in the Law features stories of inspiring leadership and timely legal issues.

Lawyer in green dress stands with hands on table and cityscape in background

The Human Cost


by Justin Smulison

2 new EU laws aim to reshape global business by enforcing ethical supply chains, focusing on human rights and sustainability

Worker wearing hat stands in field carrying equipemtn

Beyond the Billables


by Michele M. Jochner

In a recently conducted, comprehensive study, data reveals a plethora of hidden realities that parents working full-time in the legal industry face every day.

Women in business attire pushing stroller takes a phone call

This article is a part of the Best Lawyers Criminal Law Legal Guide. Read thought leadership from recognized lawyers and navigate a list of all honorees in the associated practice areas.

Explore the Legal Guide