at the heart of blackmail law lies what some call the blackmail paradox: Blackmail — which I’ll define here as threatening to reveal an accurate embarrassing fact about a person unless he does what you demand — generally involves (a) threatening to do something that you have every legal right (even a constitutional right) but no legal obligation to do, in order to (b) get someone to do what he has every legal right to do.
Nor can we resolve this by saying that coercive threats, even threats to do something legal, are generally criminal. “Pay me $10,000 or I’ll stop doing business with you” is perfectly legal (assuming that the threat comes from a sole proprietor, rather than someone lining his own pockets at the expense of his employer). “Pay me $10,000, neighbor, or I’ll sell my house, which is next to yours, to someone you dislike” is perfectly legal, too. Much legitimate hardball negotiation involves threats aimed at getting someone to do something, including threats of financial ruin. It’s just when the threat is to reveal embarrassing information that it becomes blackmail (or, as some statutes label it, coercion or extortion).
Of course, there are lots of possible theoretical and pragmatic responses to this objection; and the law does punish blackmail, though the definition varies from state to state. But the theoretical paradox, and specifically the fact that so much legal and commonplace behavior is very similar to blackmail, causes practical problems. [Too literal interpretation of a law] would even make it a crime to say, “Pay back the money you took from me, or I’ll sue you to get it back,”
I think we had a debate about the exact definition of blackmail, so here is an interesting legal opinion:
Blackmail is surprisingly hard to define