Settlement Demands Have Their Risks

Daniel Hynes was a newly minted lawyer, only one month in, when he apparently came up with a bright idea, according to this report in the New York Lawyer.

Fifteen months ago, Daniel Hynes of Manchester told a Concord hair salon to pay him $1,000 or face a lawsuit because its different prices for men and women were discriminatory. In one court document, he said the unequal prices at Claudia Lambert’s salon caused him mental anguish. That’s even though the salon charged women more than men.

Well, how is a young lawyer supposed to make a living when he’s got no clients and needs a haircut?

Unfortunately, a jury was unimpressed by Hynes’ career move, and convicted him of misdemeanor theft by extortion. 

Hynes, apparently relying on his vast legal experience, disagreed with the jury.

“The conviction goes against the First Amendment,” he said. “People have a right to petition the courts.”

It’s unclear which 1st Amendment rights he’s talking about, since sending out demand letters is a little different than petitioning a court for redress.  

But he does have a point about lawyers sending out letters to people or businesses who, they believe, are doing something actionable and trying to settle.

Where do we draw the line?  People often feel the “lawyer letter,” that demand that you pay money “or else” or stop doing something “or else,” is extortionate.  After all, the express threat is “pay me or pay to go to court and then pay me.”  There’s certainly something extortionate there.

The question deepens when it’s no longer a matter of threatening to take someone to court if they don’t settle a claim, but when it reaches the point of becoming a crime.  Does it turn on the lawyer’s good faith?  Does it turn on whether the claim has a reasonable basis in law? 

Bear in mind that there are claims brought to lawyers that ultimately turn out to be frivolous or baseless, but lawyers pursue them because they seem colorable at the time.  There’s a huge difference between the claim being shot out of the water for being frivolous and the lawyer being convicted of a crime for pursuing it.

Mr. Hynes was a busy fellow.

Assistant Attorney General Elizabeth Baker said Hynes sent letters to at least 19 salons in the state. The one to Claudia’s said haircut prices should be based on the time required or the length of the customer’s hair, not gender.

My guess is that 19 letters is probably over the line.  But a conviction for extortion?  That’s a bit much too.

Addendum:  For anyone inclined to comment, please  read this first and leave your comments.

41 thoughts on “Settlement Demands Have Their Risks

  1. Not a Yank

    Yeah, extortion is not his crime. His crime is he is a complete and total A**hole. Instead of community service this A**hole should be made to earn his living an honest way, picking up garbage, cleaning sewers, rendering offal are careers that come to mind.

  2. Jeff

    Well, so much for that lucrative partnership….

    I’m guessing they tagged him for misdemeanor extortion because being a torty-twit isn’t against the law.


  3. Diggs

    All I can say is…hahahahahahahhahahhahahhhhahahha.


    Ha ha.
    A lawyer. Shocked that anyone would view his extortion as extortion.
    It’s like a surgeon being surprised that he’s left a scar.

  4. tyree

    “But a conviction for extortion? Thats a bit two much”

    Wrong. Dead completely and totally wrong. He should be fined, disbarred and imprisoned for years. Lawyers have got stop acting like they can do what they want to whoever they want, whenever they want. A friend told me yesterday he was sued by a burglar who broke into his house and got hurt. Another acquaintance is being sued by the passenger who was in his car due to injuries sustained when someone else crashed into them (the police said it was 100% the other parties fault). Don’t even get me started on what the tort lawyers did to my fathers medical practice. There should be severe, injurious penalties to lawyers who so frivolously put so much work into destroying peoples lives. The cost to the United States annually in insurance required by excesses by the lawsuit industries is staggering, and the fear of being sued sucks the joy out of millions of hours of life in this nation every day. Just because something is “not against the law” doesn’t mean it is the right thing to do.

  5. ZZMike

    There was a similar situation here in California a year or so ago. A handicapped guy – wheelchair-bound – went around to small businesses and sued them (not even the “pay up or else” letter) under the ADA. As far as I know, he was always successful, and made a good living at it – as did his lawyer. I think they finally shut down his racket – but not nearly soon enough.

  6. Peter

    So, just how much does it cost a business to deal with a letter like this? You either pay up or go to court. Last I looked very few lawyers work for free. So, legal bills, the time it takes to prepare, the time in court, the travel back and forth.
    I am pleased to see this. It is time that lawyers learn that it’s not just lawyers that have rights.

  7. Turk

    There’s a million lawyers in the country. There will be some bad eggs, just like every other group of people.

    And like clockwork, there will be people who will try to take the bad eggs and claim that the other 99% of the populace are just like the bad ones.

    A story about lawyers behaving professionally and a case being resolved in like manner will never make headlines.


    Extortion and Blackmail

    Scott Greenfield: Daniel Hynes was a newly minted lawyer, only one month in, when he apparently came up with a bright idea, according to this report in the New York Lawyer. Fifteen months ago, Daniel Hynes of Manchester told a Concord hair salon to pay him $1,000 or face a lawsuit because its different prices for men and women were discriminatory. In one court document, he said the unequal prices at Claudia Lambert's salon caused him mental anguish. That's even though the salon charged…

  9. orthodoc

    Why would anyone be angry at having their business and livelihood destroyed by a bottom feeder? Such bad sports! They should rejoice in the fact that someone is able to make a good living by doing so; and if they don’t like it – they can get a lawyer!

  10. Greg

    “But a conviction for extortion? Thats a bit too much”

    No, it’s not. It’s entirely deserved. What he did WAS extortion, plain and simple. There are far too many lawyers bullies abusing the rest of us with such letters, it would do the US a world of good if those lawyers, and their clients, started getting punished when they made frivolous claims. I’d be happy to settle for “loser pays” (and if the client can’t afford it, then the lawyer’s on the hook for the charges, and can’t do ANYTHING until they’re paid). But “pushy plaintiffs go to jail” works, too.

  11. Stephen Bainbridge

    Great post, to which I linked at my blog. It strikes me that the problem is not lawyers’ demand letters but the underlying legal rules. After all, a demand letter that rests on no cognizable legal claim is not much of a threat.

    Here, in California, for example, there used to be quite a cottage industry of two-bit shysters using California Business and Professions Code Section 17200 et seq., the so-called Unfair Competition Law, to extrort settlements out of small businesses. One big problem was that the statute authorized plaintiffs who had never suffered any personal loss or injury to sue on behalf of the “general public.” Indeed, it allowed recovery upon a mere determination that the challenged conduct was “unfair” or “likely to deceive a reasonable consumer,” without any proof of actual injury to anyone. Another was that such plaintiffs were not required to meet other traditional class action requirements. The pleading requirements and standards of proof set out in the statute also were very lax.

    The solution was not to ban lawyers from sending out demand letters. The solution was to amend the underlying law. A few years ago, Proposition 64 amended the UCL to require the plaintiff to show he suffered an actual injury as a result of alleged unfair competition. Because Proposition 64 cross-references California’s class action statute, all representative actions under the UCL must meet all regular class action requirements. All of which went a long way towards solving the problem.

    Put another way, the problem may not be that we are overlawyered, but simply that we are overlawed. See Philip K. Howard’s The Collapse of the Common Good: How America’s Lawsuit Culture Undermines Our Freedom or Walter Olson’s The Rule of Lawyers. If you want to get rid of demand letters, prune the tree of law.

  12. Tom

    I agree, the question is what to do about the bad ones?

    I don’t think the punishment was severe enough, and what really makes the good guys look bad is not insisting on severe punishment for the bad eggs.

  13. Rich

    I used to live in NH and thought that it was a pretty reasonable place.

    I’m sure an alternative punishment could be found, like say a public horse whipping…

  14. DADvocate

    You’re wrong. It’s not a bit too much, it’s not enough. A lot more lawyers deserve the same fate.

    If lawyers had more ethics, this wouldn’t be a problem.

  15. tyree

    Way more anger than the average lawyer can understand. They forget way to often that they ruin people lives with their lawsuits. I had an acquaintance years ago who stopped a armed robbery in the store where he worked. He was fired because the store was more scared of lawsuits than men with guns. Yes, I am angry, and the lawsuit industry has should be ashamed of what they have done.

  16. HRGuy

    Mirth & Merriment

    Hynes was merely a well trained, up to a point, serial extortionist, and the fact that his scheme was replicated 19 times or more is telling.

    But to ape his line of attack, should an extortion letter’s cash demand be based on and limited solely to, the time required to compose it? If so, he might have been further ahead training to trim hair as opposed to attempting to scalp salon owners.

    Perchance though, for giggles and grins, might his classmates from law school consider a class action against the law school for damaging their professional prospects by admitting and graduating him? Surely they could assert the value of their credential is diminished due to publicity about his schemes.

    I think a good punishment would have been to have the salons give him a haircut/salon treatment of their choosing, one salon per month, with total artistic freedom awarded to the salons. Extortionist not permitted to tamper with the ‘do’ he was due between visits.

    “Yo, counselor. Where did you get the pink hair?”

  17. tyree

    There was another case in Florida, I believe where one of the lawyers victims sued lawyer because his own building was not handicapped accessible.

  18. rj

    “There’s a million lawyers in the country. There will be some bad eggs, just like every other group of people.”

    The 99% of bad lawyers give the 1% of good ones a bad name.

  19. SHG

    I agree with you tyree, that far too many lawyers don’t appreciate the havoc they wreak in people’s lives.  I attribute it to two factors that have had a negative synergistic impact:  Way too many lawyers (meaning that lawyers need to find new and imaginative ways to make people’s lives miserable to make a living because there aren’t enough legitimate claims to keep them busy) and the general litigiousness of society, with people believing that they should sue at the drop of a hat and may win the lottery. 

    This case was unusual in that the lawyer was acting on his own.  In the normal situation, the lawyer is representing a client, which means that somebody (a non-lawyer) came to the lawyer and sought his representation. 

    As law schools continue to churn out far more lawyers than society needs, we should anticipate such stupidity to continue.  Idle hands are the devil’s workship. 

  20. Overlawyered

    N.H. jury: lawyer’s demand letters amounted to extortion

    Now this could crimp the business plans of quite a few attorneys:A Manchester lawyer who threatened to sue a Concord salon for pricing haircuts differently for men and women and then took money to settle…

  21. CaptCBleu

    This “newly minted” lawyer got what deserved I am sorry but when you try to use the law for personal gain then you need to punished for it. and hopefully this jerk will be working in a Waffle House when he gets out of jail.

  22. SHG

    I don’t think anyone is arguing that Hynes is the poster boy for fine lawyering, but the question remains what the proper punishment should be.  Criminal, civil or administrative?  Should he have to pay the recipients of his letters to compensate for the aggravation he caused?  Should he be disbarred?  Should he be convicted of a crime, and if so, should he go to jail? 

    It’s easy to complain and vent, but what distinguishes easy but meaningless reactions is finding the appropriate nature and degree of sanction for conduct.  Most of the complainers sound as if they would be more than happy to have him executed, though I doubt many would offer to pull the switch.  So now that all the angst is out, what’s the real answer?  So far, no one has chosen to be specific or give a real reason, which is a shame.

  23. Jeff

    Effectively, this was abuse of authority – authority given him by the state bar assn.

    And that is something that should always be dealt with severely.

  24. SHG

    So what flavor of “severely” would you prefer, the 5 year suspension, disbarment, 20 days in the slammer, or 20 years without parole?

    By the way, in New York, the state bar association doesn’t give the authority to practice law.  They just collect dues and mail out magazines.

  25. James Lotzgesell

    I think that about six months emptying large garbage cans in to the back of a garbage truck five days a week would provide a bit of humility.
    we used to have a saying in a town I once lived in, “So and so is the best lawyer in town, if you don’t believe me, just ask him.”

  26. JohnMc

    Quite honestly he did not get enough. A lawyer, even a fresh one, has a higher standard to meet on ethics as he, unlike a nonlawyer, cannot claim ignorance of the law.

    Demand letters are a crock without the underlying evidence to support them. And I hate to say ‘there ought to be a law…’ but issuing demand letters without reasonable cause of probable damage probably should be a misdemeanor against the lawyer.

  27. Ken Hahn

    Lawyers write threat letters to nonlawyers for two reasons. First, it can be an exercise in getting what you want without a justified lawsuit. Or it can be a way to get what you want even though you know a lawsuit is completely unjustified.

    The only way to prevent the second is allow the victim to sue the lawyer. If a jury is convinced the demand letter is spurious then I believe damages should be awarded at about 100 times costs. It should also be an ethics violation to sue or threaten to sue when no reasonable case exists in fact, law or both.

    We need lawyers. We do not need lawyers who game the system to take unfair advantage of nonlawyers. If lawyers cannot be trusted to police themselves and take appropriate measures against attorneys who abuse their knowledge then maybe ethics complaints should be handled by a consumer panel rather than by the bar. Public patience with the legal profession considering themselves a priesthood with secret revealed knowledge is not endless.

    A friendly warning, clean up your own house or eventually it will be done for you. You won’t like that.

  28. bc

    If a lawyer sues on his own account, as opposed to representing a client, there should be “loser pays defendants legal fees times three” for the lawyer. In other words, you can sue on your own behalf, but you better have a great case. Otherwise, hire a lawyer just like the rest of us have to do, and then if you lose, you just walk away.

  29. Dr. Ellen

    What do lawyers do to policemen that get frisky with their guns and badges?

    That’s what should happen to lawyers that get frisky with this kind of letter. A Nifong (I believe he was a lawyer?) should get at least ten years in prison. And this extortionate little letter-writing scum should get at least one, with a five-year revocation of his license as a reminder.

    How many uneven power relationships can we tolerate? Priests diddle altarboys, Nifongs ruin lives, William Jeffersons have freezers full of cash. Professors have learned to keep their hands off their students. Let’s teach lawyers some honesty and humility, eh? They NEED it.

  30. Mike

    No, conviction for extortion is NOT too much. It is not enough.

    It is amazing to me the attorneys who think it is a “bit much” can be so oblivious to the damage lawyers run amok are doing to our society.

  31. driver

    “What do lawyers do to policemen that get frisky with their guns and badges?”

    Well said, Dr. Ellen! Yes, people who have special power under the law, like officers of the law and officers of the court should pay a real price for the abuse described above. This is no different from a cop or a judge or a legislator who uses his/her authority to extort money.

  32. Jawbreaker

    Extortion is extortion is extortion. If I threatened someone with physical harm, financial ruin or loss of enjoyment (or consortium) unless they payed me a prescribed sum then I would most certainly (if caught) be charged with extortion and would suffer the opprobrium and dictum. If a news publisher threatened to publish a story (true or not) unless the principal paid to ransom his reputation then that publisher would be charged with extortion. The actions in this case were malicious in nature and as should receive no defrence merely because they were perpetrated by a lawyer under the guise (however peripheral)of a tort. The “demand letter” travels under the auspices of being a facilitator of efficiency and expediency (and in some cases privacy) however when uncloaked and exposed as a blunt instrument then it is no different from the common street thug’s blackjack.

    Extortion –the crime of obtaining money or some other thing of value by the abuse of one’s office or authority.

    Of course this should be charged as a crime and the sentence should be as prescribed by the controling jurisdiction.

  33. dsinope

    I hope he goes to prison, though I’m certain the system will protect it’s own.

    In So. Cal we had the Trevor Law Group. 3 lawyers that filed fraudulent “consumer protection” suits against more than 2000 small auto repair shops.

    It was so bad the law was changed by the initiative process with our Prop. 64 (the legislature wouldn’t dream of hurting lawyer’s ability to extort the innocent)

  34. MikeMangum

    I agree he shouldn’t have been charged with extortion, he should have been charged with barratry, and disbarred for life.

    Of course, since the legal profession is both run by a guild that has the backing of the state, *and* the only profession that is completely policed by itself including in criminal matters, this sort of thing will continue to be commonplace.

    Assuming only 1/10 of 1% of lawyers engage in barratry a year (stop laughing!), how many cases would that be and how would it compare to actual convictions over that same time frame? As a programmer, I would assume we would run into a “divide by zero” error, since I would guess that there haven’t been any convictions of barratry recently.

  35. SHG

    Not to get too technical, but barratry ( not a crime in most jurisdictions) is the act of bringing repeated actions for the purpose of harrassment.  This wouldn’t be barratry because he didn’t actually bring any actions, just sent letters threatening to do so.  This may sound the same to you, but close doesn’t count.

  36. Pingback: When Does A Lawyer's Demand Letter Become Extortion? | Litigation & Trial Lawyer Blog

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