Summary of Selected Recent Business Law Section Legal Opinions Committee Community Discussion Activity June 2020 – December 2020

This summary of Business Law Section Legal Opinions Committee Community Discussion activity among its members does not necessarily represent the views of that Committee or 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. The comments referred to below may be viewed by members of the Business Law Section Legal Opinions Committee at that Committee’s “Discussion” web page.

Electronic Signatures on Opinion Letters.

Charles Menges, Richmond, VA, commented that following the onset of the COVID-19 pandemic, there has been much discussion about opinions relating to transaction documents that are signed electronically. He asked for views about electronic signatures on opinion letters and distinguished such electronic signatures, through a platform such as DocuSign, from manual signatures scanned as PDF documents. He believes that his firm has not signed its opinion letters electronically and would like to know whether other firms are doing so. Some lawyers representing opinion recipients ask for original opinion letters at closing which has traditionally meant an original, manual or wet-ink signature. Finally, he noted a nagging concern that permitting electronic signatures on opinion letters might increase the risk to the opinion giver or firm. For example, the convenience of clicking a button to electronically sign, may make it more likely that an opinion letter will be “signed” in violation of the firm’s opinion procedures. Perhaps the risk is lessened by requiring the formality of a manual signature.

The replies were consistent that the validity of an opinion letter is not affected by the manner in which it is signed and that nothing is inherently wrong or inappropriate about either permitting or prohibiting signing an opinion letter with an electronic signature.

Joel Greenberg, New York, NY, uses PDF Expert software which allows him to use the Apple “Pencil” to manually sign a PDF document. He does not believe the lawyers at his firm have used and applied a stored or saved signature. Cynthia Baker, Chicago, IL, has been signing opinions with the Adobe signature function for years, and does not recall ever receiving an objection. She also commented that the critical issue for an opinion letter is its delivery by an authorized representative, not its execution.

Steven Weise, Los Angeles, CA, observed that no statute of frauds applies to opinion letters and that the “signing” (however accomplished) is the manifestation of the opinion giver’s intent to “make” the representations embodied in the opinion letter. Jack Burton, Santa Fe, NM, noted that Sections 1-201(b)(37) & (43) of the Uniform Commercial Code define the terms “signed” and “writing”/“written” and suggests that, because it codifies decades of commercial practice, it should be applied by analogy to transactions that are not within the Code. He also suggested that, as a practical matter, the opinion giver could “sign” an opinion letter using a script-like font, perhaps in blue ink. Lawrence Rutkowski, New York, NY, replied that his firm has been using computer-generated script, affixed by a partner, to sign opinion letters both before and during the pandemic. He, Elizabeth Blair, Napa, CA, and David Peterson, Orlando, FL, all stressed the importance of an audit trail to help ensure that any issued opinion will have been duly authorized. Stanley Keller, Boston, MA, wrote that a firm’s process and controls for opinion letters should apply whether a signature is manual or electronic.

Brandon Mason, Minneapolis, MN, has seen many law firms or lawyers electronically signing opinions. He noted that big accounting firms have long been using electronic signatures for audit opinions and other communications and there is federal, state, and territorial legislation authorizing electronic signatures as valid. Recognizing that a majority of legal opinions he sees have a manual signature, he posited some reasons, the fact that our profession is often tradition-bound and the possibility that lawyers who must manually sign will be more likely to carefully review the opinion letter before signing. He believes that those reasons are not significant when weighted against the benefits of electronic signatures.

Effect of Existing Defaults on Enforceability

John Stockton, Harrison, NY, questioned the need for an assumption that there are no existing defaults or breaches when opining on the enforceability of an amended loan agreement. David Peterson, Orlando, FL, expressed a belief that defaults are not relevant for the remedies opinion, but might be applicable to the no conflicts opinion if that opinion did not only relate to defaults in other agreements that are caused by execution and delivery of the transaction documents. Charles Menges, Richmond, VA, also believes that defaults are not relevant unless the amendment documents expressly provide that they are not effective if there is any existing default. Robert Grauman, Waltham, MA, proposed that the assumptions are unnecessary and suggested that the opinion giver rely on a client certificate, or the reps and warranties contained in the transaction documents, to the effect that there are no existing defaults or breaches.

Cross Border Guarantee and Opinion by Borrower’s Counsel

Vikas Varma, Goshen, N.Y., questioned the reasonableness, in connection with a guarantee made by a Delaware corporation of the obligations of its non-US parent entity, of a request for an opinion that a choice of law of the non-US jurisdiction and that a judgment of the courts in that non-US jurisdiction would be recognized and given effect/enforced by courts in the “relevant Jurisdiction”. Stanley Keller, Boston, MA, commented that these opinions are sometimes given but it depends on the provision and the law of the applicable US state being covered. He suggested reviewing Cross-Border Closing Opinions of U.S. Counsel, 71 Bus. Law. 139 (Winter 2015/2016) available at the ABA Legal Opinion Resource Center webpage. He also noted that an upstream guarantee involves corporate power, a matter of internal affairs governed by the law of the US jurisdiction in which the US subsidiary is organized.

Robert Grauman, Waltham, MA, added a few caveats for the opinion giver: (1) assuming that the guarantee is enforceable under the law of the chosen non-US jurisdiction, (2) confirming that an upstream guarantee is valid under the law of the US jurisdiction in which the US subsidiary is organized, and whether or not shareholder approval is necessary (as it may be under the New York Business Corporation Law), and (3) clarifying the meaning of “relevant Jurisdiction”. Mark Duedall, Atlanta, GA, shared an example of a typical choice of law opinion, in this case dealing with a Delaware court and documents governed by the laws of the Province of Québec.

Barry Fischer, Chicago, IL, suggested the opinion giver determine whether the US jurisdiction adopted the Uniform Foreign-Country Money Judgments Recognition Act (2005) or its predecessor, the Uniform Foreign Money Judgments Recognition Act (1962) (in either case, the “Act”). If so, the opinion giver should generally be able to assume that the requirements of Sections 3 and 4 of the Act are met. Marshall Grodner, Baton Rouge, LA, also referred to the Act and wished “good luck” to an opinion giver if the relevant state does not have the Act. He also noted that the choice of law analysis is a regular choice of law analysis under the law of the relevant state. Charles Menges, Richmond, VA, commented that it might be helpful to attach to the opinion letter a list of the various conditions to enforcement contained in the Act. The importance of the satisfaction of the conditions cannot be overstated. John Williams, Wilmington, DL, shared a cautionary tale in which a reported Delaware case granted the Plaintiff’s motion to vacate a foreign judgment.