Official Publication of the Minnesota State Bar Association

Vol. 62, No. 9 | October 2005
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Concomitant Negotiations of Civil and Criminal Claims
By Timothy D. Webb

After working for a small Minnesota business for several years, “Marsha” purchased the business from her employer, “Edgar.”  For one reason or another, Marsha and Edgar had a falling-out after the sale of the business.  Edgar then thoroughly inspected Marsha’s old corporate expense statements from when she worked for him and concluded that Marsha “stole” money by putting inappropriate expenses on her company credit card.  Marsha acknowledged that some of the expenses were inappropriate but said she believed Edgar was trying to “make a profit” from the situation by demanding a significant amount more than she owed.  Edgar’s lawyer wrote a letter demanding Marsha repay the “stolen” money immediately as well as “related damages.”

In Edgar’s view, Marsha committed the crime of theft and he had a legitimate civil claim for conversion.  In Marsha’s view, Edgar was overreaching.  Still, Marsha was willing to pay Edgar’s demand — but only if Edgar would not instigate prosecution.  This presented problems for the lawyer on each side of the dispute:

  • To what extent can Edgar’s lawyer use the threat of criminal prosecution to settle Edgar’s claim of conversion? 
  • To what extent can Marsha’s lawyer secure a confidentiality clause or a more explicit clause under which Edgar would “forbear instigating criminal prosecution?” 

NO EXPLICIT PROHIBITION

Neither the ABA Model Rules nor the Minnesota Rules of Professional Conduct explicitly prohibit threatening criminal prosecution in connection with a civil legal claim or the use of a “forbear instigating prosecution” clause in a settlement agreement.1  Still, a lawyer must be wary of the professional ethics rules, as well as the criminal laws of the relevant jurisdiction, in situations where the threat of criminal prosecution may arise in connection with civil claims.

In 1992, the American Bar Association Standing Committee on Professional Ethics issued a formal opinion in which it analyzed this issue.2  The ABA Committee opined that the Rules of Professional Conduct do not prohibit a lawyer from using the possibility of presenting criminal charges against the opposing party in a private civil matter to gain relief for a client, provided that:

  1. the criminal matter is related to the client’s civil claim;
  2. the lawyer has a well-founded belief that both the civil claim and the criminal charges are warranted by the law and the facts; and
  3. the lawyer does not attempt to exert or suggest improper influence over the criminal process.3

Since a threat of criminal prosecution may be permitted under these circumstances, the ABA Committee further opined that under these same circumstances, a lawyer is permitted to enter a settlement agreement in which his client agrees to refrain from instigating prosecution.4 

QUALIFIED RESPONSES

In an April 1998 article, writing on behalf of the Minnesota Office of Lawyers Professional Responsibility, then First Assistant Director Ken Jorgensen stated: “Although the Minnesota Lawyers Board has not formally adopted ABA Opinion 92-363, the Director’s Office does use the opinion in analyzing complaints alleging threats of criminal prosecution in civil matters.”5  The article analyzed a number of scenarios and discussed whether the conduct was ethically permissible in light of “the ABA analysis.”  The article, however, stopped short of stating that the Minnesota Office of Lawyers Professional Responsibility would reach the same conclusions.

One reason the Minnesota office may not have formally adopted the ABA Opinion is because the ABA Opinion permitting threats of criminal prosecution is based upon the Model Penal Code, which defines crimes relating to this type of conduct differently from Minnesota.6  The Model Penal Code has a specific crime for improper threats of criminal prosecution called “compounding”:

A person commits the crime of compounding when that person: accepts or agrees to accept any pecuniary benefit in consideration of refraining from reporting to law enforcement authorities the commission or suspected commission of any offense or information relating to an offense.  It is an affirmative defense to prosecution under this Section that the pecuniary benefit did not exceed an amount which the actor believed to be due as restitution or indemnification for harm caused by the offense.7 

The second sentence of the Model Penal Code’s compounding statute provides a specific affirmative defense allowing a person to threaten criminal prosecution to obtain restitution.  Since threats of prosecution are not criminalized under the Model Penal Code where the actor is seeking restitution, Rule 8.4 (Misconduct) did not preclude the ABA from opining that this conduct was permissible under the Rules of Professional Conduct.

Minnesota’s criminal code has no specific crime for compounding.  Rather, improper threats of criminal prosecution are covered by the crime of coercion:

Minnesota Statutes §609.27. Coercion
Whoever orally or in writing makes any of the following threats and thereby causes another against the other’s will to do any act or forbear doing a lawful act is guilty of coercion … :
* * *
(5) A threat to make or cause to be made a criminal charge, whether true or false; … .8

Moreover, Minnesota does not have a specific defense allowing a person to threaten criminal prosecution in order to obtain restitution.  So under the opening scenario, if Edgar’s lawyer uses the threat of criminal prosecution to convince Marsha to satisfy Edgar’s monetary demand, the lawyer risks engaging in criminal conduct.

The ABA formal opinion considers the potential conduct of the lawyer for the plaintiff-complainant only.  By approaching this issue from only one side, the ABA opinion provides no guidance for the lawyer representing the defendant-perpetrator.  The Minnesota lawyer representing the other side of the transaction — in this case, Marsha — should consider the crime of tampering with a witness before negotiating a confidentiality clause or a “refrain from prosecution” clause.  A person commits the crime of witness tampering if that person uses coercion “to dissuade a witness from providing information to law enforcement concerning a crime.”9 

Approaching this issue from each side has led at least one state’s ethics board to conclude that the attorney representing the purported wrongdoer may broach the subject of not pursuing criminal charges if the civil claim is satisfied, but it would be unethical for the lawyer who represents the complainant to broach the same subject.10 

PRACTICAL LIMITS

Assuming a lawyer is able to navigate successfully Minnesota’s criminal code in negotiating a settlement agreement provision to refrain from prosecution, he may find that risking criminal conduct and ethical sanctions were not worth the effort.

First, a lawyer must be cognizant that certain crimes, e.g., crimes against financial institutions (13 U.S.C. §5318), are subject to mandatory reporting acts in which the victim is required to report the crime to law enforcement.  Second, the lawyer must consider what remedy (if any) can be used if the victimized party violates the agreement and reports the conduct to law enforcement after collecting on her civil claim.  Third, a lawyer can never guarantee that a criminal prosecution will not materialize.  A prosecutor may pursue a criminal action with or without the consent of the victim.  A prosecutor can subpoena a victim to a grand jury proceeding or to testify in a criminal trial, where the victim who offers untruthful testimony is subject to prosecution for perjury.

In sum, lawyers who choose to negotiate criminal aspects of a civil claim must be careful to stay within the bounds of the relevant jurisdiction’s criminal code and must advise their clients that there are no fail-safe methods to avoid prosecution.  c

NOTES
1. Disciplinary Rule 7-105(A), which was omitted when the ABA adopted the Model Rules in 1981, provided: “A lawyer shall not present, participate in presenting, or threaten criminal charges solely to obtain an advantage in a civil matter.”  The stated intent of DR 7-105 was to prevent lawyers from using the criminal justice system for oppressive purposes, and the rule clearly set the boundaries of acceptable lawyer conduct. 

2. See ABA Formal Opinion No. 92-363 (July 6, 1992) (Use of Threats of Prosecution in Connection with a Civil Matter).

3. Id. at page 1

4. See ABA Formal Opinion No. 92-363 at 3.  In so concluding, the ABA noted that “extortionate, fraudulent, or otherwise abusive threats …” were already covered by Rules 8.4 (Misconduct); 4.4 (Respect for Rights of Third Persons); 4.1 (Truthfulness in statements); 3.1 (Meritorious Claims and Contentions).

5. Jorgensen, Kenneth L., “When Lawyers Threaten Criminal Prosecution in a Civil Case,” Minnesota Lawyer, April 24, 1998.

6. Rule 8.4(b) prohibits a lawyer from “commit[ting] a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects.”

7. Model Penal Code §242.5. Compounding.

8. Minn. Stat. §609.27, subd. 1(5).

9. Minn. Stat. §609.498, subd. 2.  See also Model Penal Code §241.6 (a person commits the crime of tampering if he (1) believes that an official proceeding or investigation is either pending or about to be commenced; and (2) attempts to induce someone to withhold information.).

10. See NYC Eth. Op. 1995-13. (1995 WL 877125 (NYC Assn.B.Comm. Prof.Jud.Eth.).

TIM WEBB is a partner at Rider Bennett LLP in Minneapolis, practicing in the areas of white collar criminal defense, professional licensing and employment litigation.