It is unlikely anyone reading this does not know about Nike: a company that ranks among the top of the list of Fortune 500 companies that are the largest United States corporations by total revenue, Nike permeates every facet of athletics – from sportswear to advertising to equipment. In 2014, Nike was valued at $19 billion, which made it the most valuable brand among sportswear businesses at the time.
Therefore, it is not too surprising that Nike recently became a victim of extortion. There is nothing like a reputation for being one of the most valuable companies to attract predators. Enter celebrity attorney Michael Avenatti (best known for representing Stormy Daniels) who saw dollar signs as soon as he realized how desperate Nike was to keep certain events under wraps.
Avenatti’s client, Gary Franklin, ran a youth basketball league in Los Angeles. Franklin hired Avenatti to represent him after Nike ended their relationship of a decade that provided $72,000 annually and free gear. Franklin claimed that Nike executives “twisted his arm” to pay substantial funds to the mother of an elite high school basketball player and to pay the representatives of other players while doctoring paperwork to hide the reasons why the money was being paid. Therefore, after Nike ended their relationship with Franklin and his program, Franklin decided, together with Avenatti, to threaten to reveal this information unless Nike paid Franklin a $1.5 million settlement.
In addition to the $1.5 million, it is alleged that Avenatti then demanded Nike pay Mark Geragos (a fellow celebrity attorney best known for representing Winona Ryder, Michael Jackson, and Chris Brown) and himself $15 to $25 million to conduct an internal investigation of Nike. According to the government, Franklin claims that he did not know that Avenatti demanded the $15 to $25 million outside of the already demanded $1.5 million to be paid to Franklin. Franklin also asserts that he never wanted to expose Nike publicly and did not know that Avenatti threatened to go to the press regarding Nike’s youth basketball operations on multiple occasions unless the company pay out millions.
Avenatti’s attorneys claim that Avenatti was simply engaged in good faith negotiations with Nike on behalf of his client, Franklin. Furthermore, Avenatti’s attorneys claim he was seeking justice and trying to expose corruption at Nike. Upon hearing the verdict, Avenatti’s attorneys stated:
“Michael Avenatti has been a fighter his entire life. The inhumane conditions of solitary confinement he has endured over the past month would break anyone but he remains strong. We are all obviously deeply disappointed by the jury’s verdict. We believe there are substantial legal grounds for the appeal that he plans to pursue.”
Avenatti is due to be sentenced on June 17.
For those of us who have had the pleasure of taking Legal Ethics and Professional Responsibility in law school (not to mention the MPRE) we all know that Rule 1.6(b)(2) under the ABA Model Rules states:
A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer’s services.
I would argue that extorting Nike and demanding they pay millions by threatening to expose corruption would be considered “committing a crime or fraud that is reasonably certain to result in a substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer’s services.” Therefore, despite Avenatti’s attorney’s arguments that he was simply representing his client, even demanding the $1.5 million to be paid to Franklin would be considered a violation of the rules of professional conduct. The real question is, could Avenatti be disbarred? Well, maybe this is the least of his worries since he faces up to 42 years in prison.
Moral of the story: think before you tweet.
Avenatti was arrested in March, shortly after tweeting that he planned to hold a press conference the following day “to disclose a major high school/college basketball scandal perpetrated by @Nike.”