CUSTOMARY PRACTICE IN GIVING AND RECEIVING LEGAL OPINIONS
There have been important recent national developments in connection with the rendering and receipt of third party legal opinions. In October 2006, an invitation only seminar was jointly sponsored by the American Bar Association, the TriBar Opinions Committee, and the legal opinion committees of several major commercial states and law firms. The Legal Opinion Risk Seminar (“LORS”) focused on various aspects and risks related to the giving and receiving of opinions, and whether there is agreement as to the customary practice with respect to legal opinions, and how customary practice affects legal opinion risks.
The LORS was attended by numerous in-house counsel, representatives from lawyer liability insurers, rating agencies, and, the current chair and several prior chairs of the Legal Opinions Committee of the Real Property, Probate and Trust Section. A second meeting of LORS is scheduled for April 2007.
In addition to litigation issues regarding the giving and receipt of legal opinions, the LORS project is focusing on various issues related to the responsibility and concerns of opinion givers, recipients and their counsel, the assignability of opinions, who may rely on opinions, the customary practice in giving and receiving legal opinions, and whether customary practices and the meaning of specific opinion words differ depending on the size of a law firm, whether the opinion receiver is sophisticated or unsophisticated, if in-house counsel are involved, or other factions.
The ABA Business Law Section’s Legal Opinion Principles provide that “the matters usually addressed in opinion letters, the meaning of the language normally used, and the scope and nature of the work counsel is expected to perform are based (whether or not so stated) on the customary practices of lawyers who regularly give and lawyers who regularly advise opinion recipients, regarding the opinions of the kind involved. 53 Bus. Law 831 (1998). Our Section, in adopting the Real Estate Opinion Guidelines accepted this definition of the standard of customary practice with respect to interpretation of legal opinions. 38 Real Prop. Prob. & TR. J. 241 (2003).
While all major bar groups have endorsed the use of customary practice, debate exists whether customary practice is understood throughout the country by opinion givers and recipients. Also, it is not clear as to what sets the benchmark for determining customary practice; is it the TriBar reports, state and local committee reports, national real estate reports , or other sources.
The Opinions Committee of the Real Property, Probate and Trust Section has formed an ad hoc committee to work in tandem with the LORS project to try to explore the convergences and divergences between customary real estate legal opinion practice and customary corporate (non-real estate) legal opinion practice.
Please review the RPPT Legal Opinions Committee webpage at http://apps.americanbar.org/dch/committee.cfm?com=RP213000 for more information on our section’s efforts with respect to legal opinions issues and for links to various legal opinion resources and publications. There is also a link on the RPPT Legal Opinions Committee webpage to the Legal Opinion Resource Center co-sponsored by the ABA Business Law Section and the Tribar Opinions Committee