Bandera: An Epic Story of a Contrived Opinion Letter

In Bandera Master Fund LP v. Boardwalk Pipeline Partners, C.A. No. 2018-0372-VCL (Del. Ch. Nov. 12, 2021), the Delaware Court of Chancery told an epic story of how lawyers in a major law firm issued an opinion letter requested by their client and, in doing so, “contrived” to reach the result that their client wanted.  According to the Court, the legal opinion “did not reflect a good faith effort to discern the actual facts and apply professional judgment” but instead “made a series of counterfactual assumptions” resulting in an opinion letter that failed to “fulfill its basic function.”  The court awarded the plaintiffs a judgment of almost $690 million against the law firm’s client.

In analyzing the legal opinion, the Court relied extensively on legal opinion reports and literature developed to aid lawyers giving traditional third-party opinions, although the legal opinion actually given was far from traditional.  The case serves as a reminder to lawyers that:

• Careful consideration should be given to the context in which a legal opinion is given, including who will use the opinion and for what purpose.
• Lawyers should not rely upon representations or assumptions that are tantamount to a legal conclusion, nor should lawyers rely upon counterfactual assumptions that mislead the opinion recipient or others who intend to rely upon the opinion.
• Non-Delaware lawyers should be careful when interpreting Delaware law in non-routine matters.
• If your client consults with other counsel on a matter, candor with that other counsel is an essential part of your duty to your client.
• Legal opinions involve applying the law to specific facts, all in good faith.  If the facts and law do not support a client’s expectations, it may be best not to give an opinion at all.