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Extortion: Risks from Overzealous Demand Letters

Ron Stormoen

Issue

Can a person legally use the threat of potential criminal, administrative or disciplinary charges in addition to civil liability in a demand to an opposing party to pay a debt?

No. Due to recent clarifications in California law, a threat in this regard may be considered extortion.

Background

Prior to the initiation of the trial process, the vast majority of civil disputes are resolved by the parties outside of court. Common legal platitude claims that 95% of lawsuits result in a settlement. Demand letters are typically utilized to force parties into settling their disputes outside of court before the litigation process even begins. While these are great tools, certain types of demand letters run the risk of being considered extortion.

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