Avenatti did not provide details on the "act" in question, but he said Daniels was "arrested for allegedly allowing a customer to touch her while on stage in a non sexual manner".
"This is ridiculous that law enforcement resources were used to conduct this sting operation", he said. Avenatti said the officers present at the performance were in plain clothes.
The lawyer also took to Twitter early Thursday morning, calling the arrest a "a setup & politically motivated".
Daniels, who gained notoriety after suing President Donald Trump following an alleged affair, faces three misdemeanor counts of illegally touching a patron and will be arraigned Friday morning, court records show.
'We will fight all bogus charges'.
According to an article published previous year in The Columbus Dispatch, the law, which also restricts the hours of operation for strip clubs and adult book stores, is rarely, if ever, enforced. She posted a $6,054 bail and was released Thursday morning.
Daniels was scheduled to perform at Sirens Gentlemen's Club on Wednesday and Thursday, according to its website. "There has to be higher priorities".
NBC News have posted a video online of what they say is Ms Daniels arriving at Jackson Pike Correctional Center in handcuffs.
An Ohio strip club law prohibits patrons from touching a nude or seminude dancer unless the patron is a member of the dancer's immediate family.
"We will vehemently contest all charges", he said. A person who answered the phone at the club declined to comment.
Cohen allegedly paid Daniels $130,000 to keep quiet about her sexual encounter with Mr. Trump.
Her lawyer, Michael Avenatti, concedes the patrons did indeed touch his client but in a "non-sexual way".
A defamation lawsuit was also filed in April, alleging the President tried to tarnish her reputation and credibility by dismissing her claim a man threatened her in 2011, when she was ready to go public about her alleged affair with Trump.
Through White House officials, Trump has denied the affair, although Cohen has admitted paying Daniels $130,000 as part of the agreement. Trump has said he personally reimbursed Cohen for that payment.