Opinion world acts to obtain consensus on key opinion practices

Issue May/June 2017 May 2017 By Stanley Keller

Several years ago, the Working Group on Legal Opinions (WGL") and the Legal Opinions Committee of the American Bar Association's Business Law Section (the ABA Committee) undertook a joint project to identify selected aspects of customary practice and other practices applicable to third-party legal opinions that are commonly understood and accepted throughout the United States. Third-party legal opinions (or closing opinions) are typically delivered at the closing of a business transaction by counsel for one party to satisfy a condition of the other party's obligation to close. Closing opinions are relatively concise, highly structured documents that provide professional judgments of the opinion giver regarding legal matters of concern to the recipient of the closing opinion. The joint project is an effort to foster a national opinion practice to facilitate the opinion process that will be widely recognized and endorsed. It is designed to build upon the Statement on the Role of Customary Practice in the Preparation and Understanding of Third-Party Legal Opinions (63 Bus. Law. 1277 (2008)), which has been approved by over 30 bar associations and other groups.

To undertake the project, a committee (the Project Committee) that includes representatives of various state bar groups and others interested in opinion practice was formed. The Project Committee has more than 25 members and includes lawyers who give opinions and are counsel to opinion recipients and whose primary practice areas are commercial finance transactions, capital markets and securities, and real estate. I serve as co-chair of the project. The Project Committee has held numerous conference calls and meetings over the years and reviewed and discussed countless drafts of a proposed statement, all with an objective of having the bar groups and others endorse the project's ultimate work product.

The Project Committee examined the existing literature on legal opinions, including various bar reports, and focused on updating and amplifying the Legal Opinion Principles (53 Bus. Law. 831 (1998)) and the Guidelines for the Preparation of Closing Opinions (57 Bus. Law. 875 (2002)) developed by the ABA Committee.

These efforts have resulted in preparation of a "Statement of Opinion Practices" designed to update the Principles and selected provisions of the Guidelines. An exposure draft was circulated for comment in mid-2016 and revisions were made in response to the comments received. The Project Committee has recently approved a revised version of the statement for submission to WGLO and the ABA Committee for their approval to be followed by distribution to various bar groups and others for approval.

The statement seeks, through its being broadly endorsed, to foster a national opinion practice with respect to those aspects of third-party opinion practice it addresses. It covers such topics as the application of customary practice to third-party opinions, the role of facts and assumptions and the law addressed by opinions, as well as key aspects of the opinion process. By using relatively concise and direct statements, it is designed to be easily understood by judges and juries who may be called upon to interpret opinions. It also is intended to serve as a common baseline for opinion givers and opinion recipients and their counsel to facilitate the opinion process.

The Massachusetts Bar Association's Business Law Section, through its Section Council, has reviewed the Statement and requested the MBA itself to approve it.

Along with the statement, the Project Committee has prepared a more concise statement called the Core Opinion Principles that is drawn from the statement and is designed for use for incorporation by reference in or as an attachment to an opinion letter by those who wish to do so. The Core Opinion Principles also has been submitted to the WGLO and the ABA Committee for approval and distribution to bar groups and others for consideration.

The completion and approval of the statement and the related Core Opinion Principles will be a significant accomplishment in itself. The Project Committee recognizes, however, that the statement does not cover everything that might be covered. Therefore, it is continuing to consider whether the statement might be expanded, including by developing over time a more comprehensive Statement that could replace both the Principles and Guidelines in their entirety, as well as by addressing additional opinion topics. This work is just beginning and there may be more to report on progress in the future.