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Opinions Matters

Opinions Matters Fall 2018

Summary of Selected Recent Business Law Section Legal Opinions Committee Listserve Activity June 2018 – October 2018

Daniel H Devaney IV

Summary

  • This summary of Business Law Section Legal Opinions Committee Listserve activity among its members does not necessarily represent the views of the Committee on Legal Opinions in Real Estate Transactions, but rather reflects views of individual members of the Business Law Section Committee on Legal Opinions on current practice topics.
Summary of Selected Recent Business Law Section Legal Opinions Committee Listserve Activity June 2018 – October 2018
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The comments referred to below may be viewed by members of the Business Law Section Legal Opinions Committee by clicking on the “Listserve” item on that Committee’s web page.

Opinion Letter Letterhead

Charles Menges, Richmond, Virginia, addressed an issue applicable to law firms with offices in multiple states. He noted that when an opinion letter covers the law of multiple jurisdictions it is not always practical to select the letterhead of a specific office in one of those jurisdictions. He suggested that it would be most efficient, and would avoid using the wrong letterhead, if the opinion letter were issued on letterhead that identified the firm, and perhaps also the cities in which the firm has offices, but no address of a particular office. He asked whether any law firms use office-neutral letterhead that does not specify a specific office or see a problem with doing so.

The inquiry received a substantial number of replies. Stanley Keller, Boston, Massachusetts, reported that his firm has office-neutral letterhead that can be customized when desired. He noted that the lack of a specific office may leave open of questions of jurisdiction over the firm. He commented initially “having a location on the letterhead could help (or hurt).” In a subsequent response, he noted that the consensus of the respondents was that using a generic letterhead without a specific address is perfectly acceptable and often may be preferable. Ettore Santucci, Boston, Massachusetts, replied that, except for its London office (which is a separate English entity), his firm only uses office-neutral letterhead that does not identify a specific office. He indicated his personal belief that choosing letterhead that identifies a specific office would more likely hurt than help.

Justin Klimko, Detroit, Michigan, expressed his belief that office-neutral letter head would be fine, but would not be a significant factor in determining whether the opinion giver had performed the necessary diligence and complied with local practice. Norman Powell, Wilmington, Delaware, commented that while he thinks there is much to recommend an office-neutral or main office letterhead, he noted that other approaches would be reasonable, for example if an opinion recipient prefers to receive a letter with an office address in the relevant jurisdiction. He noted that it is not unusual for a law firm to provide opinions under the General Corporation Law despite none of their lawyers being admitted in Delaware. Lucian Pera, Memphis, Tennessee, was in accord and suggested that an opinion giver should be careful to be very clear in identifying the jurisdictions whose laws are being opined upon, and, perhaps, some of the jurisdictions whose laws are NOT being considered.

Some of the replies addressed the separate issues of choice of law and forum selection. Marshall Grodner, Baton Rouge, Louisiana, said that his firm includes a choice of law provision in its opinion letters and has rarely received push back. [Note that Paragraph 5.3 of the Illustrative Opinion Letter accompanying the Local Counsel Report provides an example of such a provision.] Both Stanley Keller, Boston, Massachusetts, and Jim Melville, Minneapolis, Minnesota, noted that forum selection provisions in an opinion letter are not, as a general rule, acceptable.

Requests for Opinions by New Auditor of Public Company

John Hancock, Boston, Massachusetts, reported that one of the major accounting firms claimed that whenever it conducts its first audit for a public company it routinely receives a legal opinion or certification from company counsel to the effect that (a) all outstanding shares of the company and all its subsidiaries are duly authorized, validly issued, fully paid and nonassessable, and (b) all authorized and issued shares “are duly registered under the Securities Act or were exempt from registration thereunder,” and (c) all shares reserved for issuance have been registered under the Securities Act or would be exempt from registration thereunder.

Stanley Keller, Boston, Massachusetts, referred to a discussion on the listserve archive for the Audit Responses Committee. That discussion noted that the request was distinct from the audit letter request regarding loss contingencies and is more in the nature of a third party legal opinion. His recollection was that the request is sometimes made by some auditing firms in a new engagement and is a matter appropriate to discuss with the client and the auditor, taking into consideration the costs and difficulties in providing these opinions. The nature and history of the company and its subsidiaries would be relevant factors. Casey Tjang, of Bank FM Advisors, agreed.

Committee on Foreign Investment in the United States (CFIUS)

Stanley Keller, Boston, Massachusetts, posted a Recent Development Alert from Richard Frasch, San Francisco, California, reporting on the expansion of CFIUS authority. Under the new rules, certain investments (including non-controlling investments) by foreign investors in the U.S., including U.S. real estate (whether developed or undeveloped) that is considered to be near “sensitive government property,” are subject to preclearance with CFIUS. He reported that Don Glazer, Boston, Massachusetts, suggested that in light of uncertainty over the need for any particular investment to be precleared with CFIUS, pending further guidance firms should include a standard exception in their model opinion letters for compliance with the preclearance rules.

In response to a request for appropriate language, James Cobb, Raleigh, North Carolina, advised that his firm had generally included a qualification similar to: “We express no opinion as to federal or state laws, regulations or policies concerning … national security (e.g., the USA PATRIOT Act, Exon-Florio).” He left open the possibility that additional or more specific language might be required regarding the Foreign Investment Review Modernization Act of 2018 (FIRRMA), which expanded CFIUS authority and authorized CFIUS to conduct pilot programs to implement provisions of the legislation.

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