Practical Insights for Business Owners
Client Q&A: My old boss’s lawyers are sending threatening letters to my new boss. What can I do?
My old boss's lawyers are sending threatening letters to my new boss. What can I do?
The "threatening attorney letter" is a common feature of many of the business-related disputes discussed in these Client Q&As. If you suspect that a former (or current) employee or business partner is about to breach a non-compete agreement with you, or about to provide your confidential information to someone else, or take some other injurious action in concert with a third party, it is common practice to ask your lawyer to send a "cease-and-desist" letter saying "if you do X I will sue you." It is also common to send such a letter not only to the individual, but to their counterparty as well. Putting Party A on notice that the deal they are being offered by Party B would violate Party C's enforceable rights, and might lead to a lawsuit, is a good way to get Party A to reconsider.
But what if you are Party B? What if you are the person who is trying to get a new job, or make a new deal, but your old employers, or your old business partners, are sending threatening letters to prospective new employers or new business partners in an attempt to sabotage your efforts? Is there anything you can do?
First, you should assess whether the letter writer has a basis for their claims. Are you in danger of breaching a non-competition agreement, confidentiality agreement or other obligation? If you are in the right, depending on your particular situation, you might have several options:
An Action For Defamation
An action for defamation would be the most desirable remedy, because (unlike the other options listed below) it does not require that you actually be sued, or that you can show a particularized injury (such as losing a particular job or a particular deal falling through)—someone making false statements about you can be enough. Defamation actions can be brought against the lawyer sending the threatening letter, against their client, or both.
The main obstacle to a defamation action is the so-called "litigation privilege." This privilege protects pre-litigation statements—even false statements—asserting legal rights in a dispute, so long as they are "pertinent to a good-faith anticipated litigation." Statements that fit within this privilege cannot be used as the basis for a defamation lawsuit. So for example, a letter threatening to enforce a non-compete agreement that does not exist, or a letter that also includes unrelated false statements ("X is breaching a non-compete agreement with me and also has a drinking problem," e.g.) could open up the possibility of a counter-suit, but a letter making false statements about the facts surrounding a real non-compete agreement, or exaggerating the damages that might be available if a lawsuit is filed, might not.
An Action For Tortious Interference With Contract
Threatening to bring a sham or frivolous lawsuit can give rise to an action for tortious interference with contract, but the breach or loss of an existing contract or prospective contractual relationship is also required—you won’t be able to bring this action unless you can point to a specific existing or proposed deal that fell through because of the letter. But if you do lose that new job, or the new business opportunity, as a result of that letter, you might be able to bring a tortious interference action.
Malicious Prosecution and Statutory Remedies
An action for malicious prosecution can be brought only if you are actually sued, win the lawsuit, and can show that no probable cause existed to bring the lawsuit. There are also statutory remedies available against attorneys and parties that file harassing or frivolous lawsuits or make false statements in pleadings, but these too require that a lawsuit actually be filed, and statutory damages usually only cover your attorneys’ fees and costs incurred in that lawsuit. These remedies should be kept in mind if you are actually sued.
If you are being subjected to harassing attorney letters—addressed either to you or to others—you will need good advice on how to proceed, including advice on the question of whether any of the statements in the letters are actionable. Schlam Stone & Dolan has significant experience in dealing with these issues, and we would be happy to answer any of your specific questions.