Gregory A. Brower is a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC. Emily A. Ellis is an Associate in the firm’s Las Vegas, NV office. Mr. Brower also serves on WLF Legal Policy Advisory Board and is the WLF Legal Pulse’s Featured Expert Contributor, White Collar Crime and Corporate Compliance.
In a stunning case of incredible overreach by two attorneys seeking to extort a would-be defendant company, the U.S. Department of Justice (DOJ) announced guilty pleas last Friday. This is the latest example of unscrupulous personal-injury lawyers who, in the words of the head of DOJ’s Criminal Division, went “well past the line of aggressive advocacy and crossed deep into the territory of illegal extortion.”
As part of their guilty pleas, the two lawyers, both members of the Virginia bar, admitted to approaching a large international chemicals company and threatening to make public statements alleging that the company had significant potential tort liability related to one of its products unless the company agreed to enter into a “consulting arrangement” whereby the company would pay them $200 million. The two lawyers threatened that their contemplated litigation would be a big problem for the company and its publicly traded parent, would result in a drop in the company’s stock price and reputational damage, and would be an existential threat. One of the lawyers had previously been involved in the widely publicized “Roundup” litigation against Monsanto. In email correspondence, this lawyer threatened that if the company did not accept the proposal, he and his associate would begin to advertise, rally more plaintiffs, and create “Roundup Two,” causing the company to suffer greatly.
When DOJ was notified of the scheme, agents and prosecutors acted quickly, recording many of the interactions between the parties and ultimately filing charges. Faced with a mountain of evidence supporting the case against them, each of the lawyers pled to a single count of transmitting interstate communications with the intent to extort.
A similar scheme is alleged in the much higher profile case against attorney and former Trump nemesis Michael Avenatti, who has been charged with threatening Nike with exposing allegations of misconduct unless the company paid him millions of dollars in “consulting fees.” At the time of Avenatti’s indictment and arrest last year, then U.S. Attorney for the Southern District of New York Geoff Berman observed that: “When lawyers use their law licenses as weapons, as a guise to extort payments for themselves, they are no longer acting as attorneys. They are acting as criminals, and they will be held responsible for their conduct.”
The lesson here for potential victims of such schemes is simple. When a lawyer makes a demand on an individual or business in a way that appears to be an inappropriate threat, it probably is just that, and it may also be a federal crime. And, as these recent criminal prosecutions clearly show, DOJ will be interested in knowing about it.