Whatever comes to mind, and then the interesting directions that thought will take you on the web.

Sunday, January 13, 2002

Empty Legal Threats

I have a website that sends out a daily analysis of covered calls. Individuals subscribe to the service, and a mail message is sent out daily.

Imagine my surprise when I got the following email:

We appreciate the information that you are forwarding to one of our Financial Advisors in the Ponte Vedra Beach, FL office of Morgan Stanley.

However, this type of communication is not permitted by our firm from out sources. I respectfully request you take the Financial Advisors name off you list. Failure to do so will result in much stronger action by the Morgan Stanley Legal Council. Thank you for your assistance.

Rick Pomeroy

V.P. and Branch Manager

Morgan Stanley

Ponte Vedra Bch., FL

I replied with the following:


Let's be clear about one thing. The list is a sign up list. ie your financial advisor chose to subscribe to the list.

I can not be responsible for administering the internal policies at Morgan Stanley.

The message you forwarded to me contains information on how to unsubscribe from the list. I suggest that you mandate your financial advisor to unsubscribe from the list, and that you consider disciplinary action against your employee for an implied violation of Morgan Stanley internal policies.

Thankyou for understanding,

Alan Fothergill

I then got the reply

Thank you for your reply. Now, let me be perfectly clear. I understand that someone from my office subscribed to your service in error and I
will handle it. However, if another message comes in to my office from you, the steps previously described will be taken.

This is extraordinary. I was never told the name of the employee, yet I risk the might of "Morgan Stanley Legal Council" if I happen to send him a message.

It got me thinking about empty legal threats, and the imbalance of power. I googled to "empty legal threats", which then took me to this interesting page, which had a reference to a Ohio Wesleyan University shamefully giving in to empty legal threats. I searched a bit more to find the background which described how the threat of legal action causes the party with fewer resources to back down.

This was rather more eloquently argued by Jonathan Swift in Gulliver's Travels

There was a society of men among us, bred up from their youth in the art of proving by words multiplied for the purpose, that white is black, and black is white, according as they are paid. To this society all the rest of the people are slaves. For example, if my neighbor hath a mind to my cow, he hires a lawyer to prove that he ought to have my cow from me. I must then hire another to defend my right, it being against all rules of law that any man should be allowed to speak for himself.

Now in this case I am the right owner lie under two great disadvantages. First, my lawyer, being practiced almost from his cradle in defending falsehood, is quite out of his element when he would be an advocate for justice, which as an office unnatural, he always attempts with ill-will.

The second disadvantage is that my lawyer must proceed with great caution, or else he will be reprimanded by the judges, and abhorred by his brethren, as one that would lessen the practice of the law. And therefore I have but two methods to preserve my cow. The first is to gain over my adversary's lawyer with a double fee, who will then betray his client by insinuating that he hath justice on his side. The second way is for my lawyer to make my cause appear as unjust as he can, by allowing the cow to belong to my adversary; and this, if it be skillfully done, will go a great way towards obtaining a favorable verdict; it having been found, from a careful observation of issues and events, that the wrong side, under the management of such practitioners, has the fairer chance for success.

Is there any law against a party throwing its weight around and making unwarranted legal threats? If not, why not?