We recently experienced an incident with a Plaintiff’s counsel in a bankruptcy Adversary Proceeding. In a letter proposing a settlement, he threatened to file criminal charges against our client (which would have been totally unwarranted) and/or report our client to administrative regulatory authorities (which would have been equally unwarranted) if our client did not settle. Doing research on whether such threats involve improper ethical conduct, I was surprised at what I learned. I had gone into my research thinking that the answer was clear and that such conduct would be considered unethical. What I found was counterintuitive. The variety of approaches ranged from perspectives that such conduct was unethical to allowing such conduct as long as the threat is related to the client’s claim, the lawyer has a well-founded belief that both the civil claim and the criminal charges are warranted, and the lawyer making the threat is not misusing the criminal process.
The following are informative sources that I have found: A.B.A. Formal Op. 92-363 (1992) Use of Threats of Prosecution In Connection With a Civil Matter; A.B.A. ANNOTATED MODEL RULES OF PROFESSIONAL CONDUCT 438-439 (5th ed.) (surveying various approaches); Indiana State Bar Legal Ethics Committee, Op. 1 (2008) Attorney’s Threat to Report Adverse Party to Professional Licensing Commission, as reported in 51 RES GAESTE 34 (June 2008); Timothy D. Webb, Concomitant Negotiations of Civil and Criminal Claims, 63 BENCH & BAR MINN. 22 (2005); Kenneth L. Jorgensen, Ethics Advisory Opinions, 60 BENCH & BAR MINN. 12 (2003); Patrick Emery Longan, Ethics In Settlement Negotiations: Foreward, 52 MERCER L. REV. 807 (2001); Debra S. Katz, Julie Chambers, Attorneys’ Ethical Responsibilities During Settlement Negotiations, ALI-ABA COURSE OF STUDY ADVANCED EMPLOYMENT LAW AND LITIGATION, SG047 ALI-ABA 1153 (2001).
I would be curious to have responses from people who have experienced this, what you did about your situations with respect to reporting, and whether you are aware of any other authorities, to include bar association opinions, addressing this area.