Deciphering the Function of a Legal Opinion
The primary purpose of a legal opinion is to provide the recipient and/or the recipient’s counter party with an extra layer of security and assurance regarding Title and the validity of the legal decisions made. Generally, legal opinions are issued to the lender or buyer in connection with the acquisition of an asset or enter into a credit facility. In the case of real estate, it provides assurance over and above the opinion of Counsel for the seller or borrower .
In light of the fact that a legal opinion acts as a second pair of eyes on the due diligence process, it is important that the user of the opinion relationship understand the recipient’s expectations and what they will gain from the opinion. In turn, it is equally important that the opinion giver have a full understanding of the background to the transaction and the key parties involved before commencing the process of reviewing the documents and preparing the opinion. Counsel for the lender/buyer (the "recipient") is responsible for instructing counsel for the vendor/seller (the "opinion giver") to prepare a legal opinion.
Essential Components of a Legal Opinion
Broadly, the legal opinion will typically consist of five segments: (i) an intro, (ii) a statement of facts, (iii) the legal analysis, (iv) a conclusion, and (v) a signature segment. While there are variations, each of these segments will be fairly standard.
The introduction will generally consist of a few simple lines identifying the environment in which the agreement was drafted (such as the fact that you are the buyer’s attorney preparing the opinion for the seller’s attorneys). It may also identify the basic transaction to which the opinion relates (such as the basic nature of a sales agreement’s subject matter). While the introduction is generally brief, it is an important part of the legal opinion. This is where you describe who you are, why you are writing the opinion, what your credentials are to write the opinion and who it is being written for.
The statement of facts will typically include the essential terms of the underlying transaction, as well as any other facts that are necessary to understand the analysis and conclusions to follow. Just as in a motion for summary judgment, all facts will be presumed to be true. Instead of questioning the quantity and integrity of the evidence, in a legal opinion, the opinion passes on the sufficiency of the evidence presented, unless you are making assumptions or explicitly negating certain facts of the factual presentation.
The legal analysis will typically consist of arguments regarding each of the key elements of the causes of action and/or defenses upon which the opinion is based, together with reasons that support the opinion on each element, and/or reasons for finding the elements are not met, including discussion of the applicable law, case citations and/or treatises, and cites to expert opinions. There is a statutory and procedural exception to the foregoing analysis and explanation requirement for California general corporate law opinions. Because that exception is jurisdiction-specific (California-specific), the substance of that exception will not be discussed or included in this article.
Creating an Effective Legal Opinion Outline
When it comes to laying out a legal opinion, there are several critical points attorneys and their supporting staff must bear in mind if they want to make the process as streamlined as possible:
• Organize the document in such a way that clearly outlines the client’s structure, the issue, their request, your research question, the scope of your investigation and research actions, your method of analysis, the relevant legal authority, and your firm’s action position and recommendation. The more detail you can provide up front with a synopsis header immediately following the statement of the issue at hand (i.e., just after providing a general summary of the client’s structure), the easier it is for the reader to quickly scan through the document.
• Make use of bolding and lists to help clarify information and enforce hierarchy of the sections as well as importance of particular points. For instance, the statement of the issue should be bulleted if necessary and both that and the conclusion should be bolded.
• Handle any disclaimers or other general items at the end of the document. This makes them harder to miss or forget about and once the reader has successfully plowed through the bulk of the research and actually reached your recommendation, they’re probably in a good place to contact you about setting up a plan of action (which you’ll then have the opportunity to discuss specific actions and timelines at that stage).
Common Pitfalls in Legal Opinion Drafting
Here are a few common mistakes to avoid when drafting legal opinions:
Failing to make your reasoning clear. A client reading the opinion should be able to deduce how you arrived at your conclusion by studying and following your reasoning. Follow two rules for clarity: Keep your sentences short and keep your paragraphs short. Your logic must be easy for your client to follow.
Overlooking important case law. Every jurisdiction is different and a legal opinion is therefore a product of research. Don’t forget to investigate state and federal court cases and statutes. Be especially aware of any recent amendments to the relevant statutory scheme and of any new case law that pertains to the issue at hand.
Failing to address client questions. Make sure that your legal opinion addresses all questions asked by your clients or their intermediaries. Failure to do so may lead to misunderstandings. It will also make you appear unprofessional and evasive.
Legal Opinion Tone and Style Detailing
Legal opinion is one of the most formalized written documents one can give. Because an opinion is a pronouncement of professional certainty concerning a legal issue, the tone should be matter-of-fact and confidently without any overly friendly words or phrases.
The overall style is somewhere between a more conversational letter and a technical brief. Your opinion is a product of your professional experience backed up by your legal research, but your reader is not a lawyer, so the tone should not remind them of law school. A legal opinion does not have a story arc; there is no "denouement" to tie everything together at the end or inspire the reader. There is no review of the law in your opinion or a word count for how long your opinion should be. You should be clear and succinct. Your opinion should start with the "opinion" and follow with a thorough discussion. Writing in the "legal opinion format" has nothing to do with how long or short your opinions should be.
For example, if you were to write the opening paragraph of a legal opinion in letter form to a client , the opener might be: "I am writing you concerning the open offer of approximately 800 acres of undeveloped land from the State for the purchase price of Eight-Hundred-Fifty-Two Thousand Ninety-One Dollars (855,091), that you received on April third." In this case, the writer was doing nothing wrong, except, that there is nothing "wrong." Professional writing, like a legal opinion, should not always sound like every other legal opinion you’ve ever heard. If a writer chooses to use dead-pan language in their opinions, then that is entirely appropriate.
Because a legal opinion does not follow any real structure or arc, that relies more on strict legal facts than a flowing narrative, it is important to use words sparingly. Your choice of words and sentence structure should be precise. A more conversational tone is appropriate for many documents but make sure you remain respectful and professional. It’s equally important to avoid adding unnecessary verbiage or legal jargon; no matter how easy you find it to explain something, be sure to keep your sentences brief and clear.
Legal Opinion Example Template
A sample legal opinion is a streamlined version of the legal opinion format covered in the previous section. Here is an example of how a legal opinion might look in practice:
Imaginary LLC
123 Imaginary Lane
Imaginary City, State 12345
RE: Legal Opinion for Imaginary LLC ("LLC")
Dear [Client Name]:
Pursuant to your request, we have conducted a legal opinion with respect to the above-referenced LLC and its subsidiaries in connection with a Non-Disclosure Agreement between LLC and [Counterparty Name] (collectively, the "Counterparty"). This LLC consists of [Names of LLC Members] as members. All of the members are natural persons, not corporations or other entities. We have prepared this legal opinion to examine the authority, power, and capacity of LLC to enter into contracts with respect to the terms in [Counterparty Nondisclosure Agreement]. The following sections briefly describe the relevant statutory law applicable to this legal opinion: [The rest of the opinion would go on to cover each of the relevant statutes and cite relevant authority].
In preparing this opinion, we reviewed the operating agreements of LLC and all relevant statutory provisions applicable to LLC. We also reviewed relevant case law, and those statutes were included in our examination of the case law. It is our opinion that LLC has the requisite power, authority, and capacity to enter into the terms of the Nondisclosure Agreement with the Counterparty.
As stated above, the statute does not specifically preclude the power, capacity, and authority of the LLC to enter into the terms of the Nondisclosure Agreement with the Counterparty. We can find no relevant regulations or judicial findings that would affect the applicability of this statute. In reviewing the statutes, regulations, and case law the LLC has the requisite power, authority, and capacity. In fact, the LLC has the same power, capacity, and authority that a corporation would have vis-a-vis third parties. Unless there is a specific statute, regulation or judicial finding precluding the LLC from doing business with [Counterparty Name], [Counterparty Name] will have no choice but to comply with the LLC agreement.
In conclusion, we find that all of the above factors point to the assertion that LLC has the requisite power, capacity, and authority to engage with [Counterparty Name] with respect to the terms in the [Counterparty Nondisclosure Agreement]. We trust that the above has helped to explain the reasons upon which our conclusions are based. Please feel free to contact us with any additional questions or issues.
Very truly yours,
[Signed]
[Attorney’s Name]
[Law Firm Name]
[Law Firm Contact Information]
Use of Technology in Drafting Legal Opinions
The advancement of legal technology continues to reshape the legal industry, including the process of drafting legal documents. In the context of legal opinions, technology can play a significant role in enhancing both efficiency and accuracy. Various tools and software have been developed to assist legal professionals in their research tasks and word processing activities.
One of the most notable areas in which technology has made a significant impact is legal research. AI-driven legal research tools, such as Casetext and Westlaw Edge, utilize powerful algorithms and databases to help lawyers quickly locate relevant statutes and cases to support their legal opinions. These tools provide comprehensive search functionalities, allowing users to find precise information by inputting specific queries or using natural language. The AI also offers intelligent suggestions, highlighting cases and statutes that are most relevant to the legal opinion being written. This eliminates the need to sift through countless cases in the hopes that they might be on point, a procedure that could be both time-consuming and costly .
Furthermore, several document drafting software solutions are available to help streamline the writing process. For example, MasterWriter and Quosal can be utilized to create and edit templates, ensuring that the formatting of the legal opinion adheres to local conventions before the document is finalized. Other tools, such as Grammarly and ProWritingAid, offer advanced proofreading functionalities that may catch spelling and grammatical errors that may otherwise be overlooked. These tools not only help maintain professionalism and clarity in legal opinions, but also improve overall efficiency in the writing process.
It’s essential to note, however, that while technology can greatly assist with the drafting process, the competency and judgment of the lawyer remains paramount in preparing legal opinions. Legal opinions often require more than mere citation of statutes and case law, and the efficacy of an opinion depends largely on the lawyer’s ability to apply existing law to the specific facts at hand. Technology should therefore be viewed as a complementary tool, rather than a complete substitute, for sound legal judgment.