That was a bad move.
As you can see here, not only is Inman not someone who is likely to back down, he is about infinitely times more creative than whatever drone is running FunnyJunk.com. He has reposted the letter, annotated it and illustrated it, and included an enormous list of links to pages on FunnyJunk.com where his work was even then being displayed without credit. (They have since taken those pages down, because they're sneaky like that and also probably don't know about the Wayback Machine.)</p>
He also declared that rather than pay the drone and/or his lawyer $20,000, he would try to raise that much money through donations, "take a photo of the raised money" and "mail you that photo, along with this drawing of your mom seducing a Kodiak bear" before donating the money to charity.
As of today (Tuesday) at 2 pm Pacific time, he had raised $120,414. [$156k at the time of this ONTDP post]
Those are a few reasons why you should not mess with Matthew Inman.
The lawyer making these threats needs to do some more research, also, assuming he does any of that. Truth is a defense to defamation claims, for one thing, and there are also First Amendment issues involved here. Rather than rambling on about that, though, let me direct you to a post by another guy not to mess with, namely Ken over at Popehat. He also posted on this event today, and has previously written in detail about California's "anti-SLAPP" law, which is designed to allow the target of a lawsuit like the one being threatened here to move to dismiss at an early stage and (usually) to recover attorneys' fees.
It looks like Inman is located in Washington, and Washington has an anti-SLAPP law much like California's. My guess is that FunnyJunk will just quietly fade away, or at least they will if they have any sense at all. If not, they'll likely get slapped around a little more.
Lowering The Bar