Fine lines and not so fine lines

About six weeks ago, The Law For Lawyers Today published a good post about a problem for lawyers that sometimes lurks around efforts to make demands in order to settle legal disputes for clients — the risk of being accused of extortionate conduct. You can read that post here.

That post was prompted by what was then the most recent high-profile instance of such a situation causing roiling public debate – whether the lawyer for The National Enquirer had crossed any lines into extortion with respect to his dealings with Jeff Bezos and what appeared to be threats to release sensitive photographs of Mr. Bezos unless Bezos would cause The Washington Post to back off an ongoing investigation of The National Enquirer. That post largely just helps with issue spotting and particularly emphasizes the need to know your state’s laws, general federal laws, and a reminder that you can disclose what you need to about a client’s matter in order to get advice about how to comply with your own ethical obligations.

I’m writing today because there is now an even higher-profile situation involving a lawyer attempting to teach all of the rest of us about what not to do when it comes to avoiding being accused of extortion. This instance involves the lawyer previously best known for representing Stormy Daniels and injecting himself into the Brett Kavanaugh confirmation hearings in a way that, frankly, unfairly-tarred women who were making highly-credible claims, Michael Avenatti.

Avenatti has been indicted in federal court in New York with charges involving some of the federal statutes referenced by the linked blog post over an alleged effort to extort some $20 million from Nike. You can read the 11-page indictment here.

Now there are certainly aspects of this topic that can be nuanced and properly viewed as the kind of slippery slope on which ethical guidance is extremely wise, but this does not seem to be one. This seems to be a lot more straightforward of a situation in which the line crossing is pretty clearly apparent in the narrative, if the facts alleged can be proven. (Admittedly, part of why it seems easy to reach that conclusion is not only the substance of the indictment but the fact that the lawyer in question was also separately charged that same week in California for what is alleged to have been efforts to defraud a client out of settlement funds. You can read that California criminal complaint here.)

But sticking to the substance of this indictment, these alleged facts are the problematic ones:

a. On or about March 19, 2019, in Manhattan, MICHAEL AVENATTI, the defendant, and CC-1 met with attorneys for NIKE, Inc. (“Nike”) and threatened to release damaging information regarding Nike if Nike did not agree to make multi-million dollar payments to AVENATTI and CC-1 and make an additional $1.5 million payment to an individual AVENATTI claimed to represent (“Client-1”).

b. On or about March 20, 2019, AVENATTI and CC-1 spoke by telephone with attorneys for Nike, during which AVENATTI stated, with respect to his demands for payment of millions of dollars, that if those demands were not met “I’ll go take ten billion dollars off your client’s market cap … I’m not fucking around.”

And then this piece offered later in the indictment as further background to explain:

8. … Specifically, AVENATTI threatened to hold a press conference on the eve of Nike’s quarterly earnings call and the start of the annual National Collegiate Athletic Association (“NCAA”) tournament at which he would announce allegations of misconduct by employees of Nike. AVENATTI stated that he would refrain from holding the press conference and harming Nike only if Nike made a payment of $1.5 million to a client of AVENATTI’s in possession of information damaging to Nike, i.e. Client-1, and agreed to “retain” AVENATTI and CC-1 to conduct an “internal investigation” – an investigation that Nike did not request – for which AVENATTI and CC-1 demanded to be paid, at a minimum, between $15 and $25 million. Alternatively, and in lieu of such a retainer agreement, AVENATTI and CC-1 demanded a total payment of $22.5 million from Nike to resolve any claims Client-1 might have and additionally to buy AVENATTI’s silence.

Now, assuming that was how things actually played out, it is quite to formulate some helpful guideposts to a lawyer trying to figure out distinctions between legitimate settlement demands and extortion.

First, if you are a lawyer who actually has a client with a potential legal cause of action against a publicly-traded company that involves allegations that – once lodged in a publicly-filed court document – could result in negative publicity for Nike, you not only can, but might well be ethically obligated – to make a settlement demand for the client to try to avoid filing suit. (Depending on the nature of the claims and what your client might actually be able to recover in court, it is possible that you could even demand tens of millions of dollars in exchange for the client’s agreement not to sue.

Second, generally speaking, if what you are demanding money in exchange for is refraining from filing a lawsuit or pursuing some other legal proceeding that a client would have at least a colorable right to otherwise pursue, then you are pretty stable ground. If what you are demanding money to refrain from doing is holding a press conference. You should be worried that, perhaps, you are headed down the wrong path.

Third, if you are threatening a publicly-traded company and you decide to tie your settlement demand with a blatant threat that your action will directly damage their market valuation, you ought to again really ponder what you are doing. Particularly, if you are not threatening to file a suit for a client and, perhaps, unless you are threatening to file a suit for a client that would actually be a suit over whether or not the company has made appropriate public disclosures directly linked to how much its shares of stock now sell for.

Fourth, if part of your threat involves the party being threatened having to agree to let you represent them, you have definitely careened off the path of being engaged in legitimate efforts on behalf of a client to resolve a matter. Not only are you setting yourself up for the kind of fall that can result in jail time, you are also – at that point – likely violating your home state’s ethics rules on the solicitation of clients. Not to mention rules on conflicts of interest because – if you’ve decided to go down this path, you likely have also failed to realize that you are going to need a pretty good conflict waiver from the client you are claiming to represent in the first instance in order to have any chance of complying with your state’s version of RPC 1.7 (and, even then, you would still be likely to have a real problem on your hands regarding your state’s version of RPC 5.6.)

“Sleeping,” sleeping, and Cronic sleeping.

Three recent cases involving lawyers alleged to have been sleeping during trial (actually only two about sleeping lawyers, one about a lawyer pretending to sleep) leave me feeling like there has to be the germ of a worthwhile point to be made in there somewhere, but after drafting and redrafting this post in spare moments the last couple of days, I’m not sure any longer that had a point to be made but here we are, and I’m pot committed, so …

Those of us who primarily handle civil litigation tend to think that the stakes we deal with are high, and our clients certainly think so and expect us to treat their cases in that fashion.  Those responsibilities can end up keeping lawyers up at night.  Yet, in criminal cases, there are typically more significant repercussions for the participants that can flow from a lawyer’s mistake.  Jail time, capital punishment, etc.

Falling asleep during trial would be universally recognized as a pretty significant error for an attorney make.  Yet, pretending to be asleep during trial could, of course, be a strategic ploy.  The three cases decided in 2016 so far that got me thinking on this topic manage to cover the spectrum of the “slumbering lawyer” problem.

Back on Groundhog Day of this year, a prosecutor in Maine was chided by that state’s highest court for conduct described as “sophomoric, unprofessional and a poor reflection on the prosecutor’s office.”  Specifically, the conduct was pretending to sleep during the defense’s closing argument in a murder trial.  The court determined, however, that neither that conduct, nor other conduct by the prosecutor that the court found problematic, was enough to find prejudicial error to the defendant sufficient to justify reversing the homicide conviction in the case.  The stage craft of pretending to sleep could, as with other kinds of stagecraft, be viewed as amounting to a violation of RPC 4.4(a) on the part of the prosecutor.  Maine’s RPC 4.4(a), like the ABA Model Rule, prohibits a lawyer representing a client from “us[ing] means that have no substantial purpose other than to embarrass, delay, or burden a third person….”

Moving on from fake sleeping, but also back in February 2016, the 11th Circuit affirmed a lower district court’s ruling that a criminal defendant was not prejudiced by his slumbering counsel because the lawyer alleged to have fallen asleep only did so during a non-critical stage of the trial.  Specifically, defense counsel fell asleep while a recorded interview of an accomplice – spanning 71 pages in transcript length – was played to the jury.  The 11th Circuit agreed with the district court’s ruling that the standard for ineffective assistance under Strickland v. Washington and not U.S. v. Cronic was correct and that the trial court did not unreasonably apply Strickland.

The 11th Circuit opinion presents a very dry read including very little detail (even the lawyer involved never has his name mentioned).  From the opinion though, it appears the only actual proof mentioned of an instance of sleeping was the lawyer’s own statement made after cross-examining the witness and in response to the prosecutor asking for a break while defense counsel was cross-examining the law enforcement officer who had authenticated the recording:  “I need to take a break; I fell asleep a couple of times.”  Whether a sleeping lawyer is viewed as providing incompetent representation in violation of RPC 1.1, or acting in a manner not sufficiently diligent under RPC 1.3, or simply not in a position to effectively communicate with the client during trial under RPC 1.4, one would think that, if the lapse into unconsciousness could actually be proven, that the potential would exist for a finding of a disciplinary violation.  Yet, I would be very surprised if discipline ever came to pass.

In contrast, just last week, the Fourth Circuit reversed the conviction and thirty-year sentence of a defendant whose counsel also fell asleep during trial.  The Fourth Circuit case, as with the 11th Circuit case, involved a Section 2255 proceeding, but the difference in this situation being fairly described as one of degree and of the resulting legal standard to be applied.  Everyone who testified during the evidentiary hearing proceedings — except for the lawyer in question — testified to having witnessed the lawyer asleep at least once during trial.  The lawyer’s client after first alleging his lawyer fell asleep twice, eventually testified that his lawyer had slept for as many as 10 minutes a stretch some 10 to 20 times during the trial.  Counsel for other co-defendants each testified that despite now having a direct view of him at all times, they had noticed at least one bout of snoozing.  Perhaps, most damningly, a juror testified that the lawyer was asleep for at least a half an hour almost every day of trial and that the sleeping lawyer had been a topic of discussion during deliberations.  The lawyer, in question, in testimony not lost on the appellate court, said he couldn’t recall sleeping during the trial.

The Fourth Circuit, in what was a first impression matter for it, joined several other circuits in indicating that the Cronic standard — permitting the presumption of prejudice — and not Strickland applies when a lawyer is asleep for a substantial part of the trial.  The Fourth Circuit, however, also explained in a footnote that its ruling should not be treated as meaning only “the most egregious instances of slumber” will serve to trigger the need for the Cronic standard, indicating that being asleep for a critical part of the trial alone could also be sufficient.  Thus, the same fact pattern in the 11th Circuit matter might suffice in the Fourth Circuit if the nap had come not during the paying of an audiotape of a repetitive witness statement but during a critical time in the trial.

The same set of ethics rules mentioned above as to the one-time-napper are, of course, also implicated by repeated siestas during trial, but the odds of such a proceeding being pursued and discipline imposed inherently should be more likely as to the lawyer in the Fourth Circuit case.  Given the pretty broad conspiracy that would be necessary for the lawyer to prove his public explanation that this was a political dirty trick mounted against him because he had run for public office, such a case would likely be difficult to defend.

[P.S. While his other response, equating the allegations against him as an insult to the federal judge who presided over trial, the logistics of the courtroom described in the Fourth Circuit opinion that could explain why the trial court wouldn’t necessarily have seen the sleeping no matter how frequent and the Fourth Circuit’s own pretty strong rebuke of the district judge’s discounting of the witness testimony — “[T]he district court utterly failed to consider the likely possibility that each was saw [the lawyer] asleep or nodding off on different occasions.  Had the court done so, it would have reached the conclusion that [the lawyer] could have been asleep on at least six or seven different occasions.” — that approach isn’t likely as elegant a way of defending himself as it might seem at first glance.]