Survey of Law Firm Opinion Practices

In 2019, a subcommittee of the ABA Business Law Section’s Legal Opinions Committee (the “Legal Opinions Committee”) conducted a confidential survey of U.S. law firms on their legal opinion practices. This was the third such survey undertaken by the Legal Opinions Committee. The first was conducted in 2002 with a report published in 2004, and the second was conducted in 2010 with a report published in 2013. Fifty law firms responded to the 2002 survey, and the 2010 survey received 252 responses. The 2019 survey received about 300 responses from law firms.

At the spring 2021 meeting of the Legal Opinions Committee, the survey subcommittee presented a report on the 2019 survey (the “Survey Report”). The Survey Report is intended to provide an overview of opinion practices of law firms of various sizes. Law firms with more than 500 lawyers represented about a quarter of the responding firms, with law firms with 200 or fewer lawyers about 60% and law firms with 50 or fewer lawyers about one third. Unlike the 2002 and 2010 surveys, real estate opinions were not excluded from the types of opinions intended to be covered by the survey.

The Survey Report will be an invaluable resource for law firms to compare their own opinion practices to the opinion practices of 300 other firms, including many firms with well-established opinion policies and procedures, although individual law firms who responded to the survey are not specifically identified. It is anticipated that the Survey Report will be published in the Business Lawyer later this year or early next year.

The following highlights some of the findings of the 2019 survey:

• Opinion Committees. About three-quarters of the law firms had a least one opinion committee. Since 2010, the number of small firms (firms of 200 or less lawyers) with an opinion committee increased from about one-half to about two-thirds of such firms. In about two-thirds of large firms and almost all small firms, an opinion committee (or its individual members) reviewed, cleared or approved opinion letters.
• Role of Partners. More than three-quarters of all firms permitted only partners or lawyers with equivalent status to sign opinion letters.
• Opinion Training. About three-quarters of firms reported that their opinion committees conducted education or training of lawyers on opinion practice.
• Consulting Lawyers. About three-quarters of all firms required or expected that lawyers preparing an opinion letter would consult with another lawyer (usually a partner or equivalent) regarding each opinion letter. The consulting lawyer may be a member of the opinion committee or another lawyer with the requisite expertise in the subject area. About two-thirds of firms did not prohibit the consulting lawyer from being involved in the transaction, and more than three-quarters did not prohibit the consulting lawyer from being otherwise involved with the client.
• Delaware Opinions. Almost all non-Delaware firms gave routine opinions on the status, power and authority of Delaware corporations and limited liability companies, and most firms gave such opinions on Delaware limited partnerships. Other than Delaware, few firms without an office in a state gave opinions on the entity laws of that state.
• UCC Opinions. About three-quarters of firms gave opinions on Article 9 of the Uniform Commercial Code of a state or states in which the firm did not have an office.
• No-Litigation Confirmations. Most firms gave no-litigation confirmations, but many resisted giving them. Most of the firms that gave such confirmations limited them in certain ways, such as only pending litigation, litigation threatened in writing, proceedings in which the firm represented the client and/or proceedings that could adversely affect the transaction.
• No Breach or Default Opinions. About two-thirds of firms giving opinions as to whether the transaction that is the subject of the opinion letter would cause a breach or default of other agreements to which the client is a party limited the covered agreements to those identified in a list referenced in the opinion letter.

Lawyers are encouraged to read the Survey Report when it is published for a more complete and detailed summary of various aspects of opinion practices of the law firms who participated in the survey. The Survey Report is a useful tool for law firms looking for a reality check for their own opinion practices and trying to learn what other firms are doing or not doing in regard to the issuance of opinion letters.