Report on Third-Party Remedies Opinions - 2007 Update
Appendix 6: Third-Party Legal Opinion Survey Responses

Third-Party Legal Opinion Survey: Summary of Responses Received as of 11/23/01 (non-confidential version)

35 responses received out of 45 surveys sent (78% response rate). Note: there were actually 46 surveys sent, but one firm responded that it did not issue legal opinions so it could not answer any of the questions (so it was deleted from all summaries).

Size of law firm:

  1. up to 10 lawyers -- 2 (both California-only)
  2. 11 to 100 lawyers -- 3 (2 are California-only)
  3. more than 100 lawyers -- 30 (8 California-only)

14% (5 out of 35) 100 or less; 86% (30 out of 35) more than 100.

Is your firm a multistate law firm?

  1. Yes -- 23 (66%)
  2. No -- 12 (34%)

Does your firm have an Opinion Committee (or a designated group of lawyers within your firm) that (1) sets firm policy for the delivery of legal opinions and/or (2) approves (or a member of which approves) a legal opinion before the firm delivers the opinion?

See more detailed response chart

What is your current position in the firm?

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1. In what types of transactions does your firm customarily issue remedies opinions (assuming any legal opinion is given in the transaction)?

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2. When giving a remedies opinion with respect to the enforceability of a contract, does your firm customarily consider the opinion to include:

  1. Each and every provision of the contract -- 12 (34%). 10 of these are multistate (MS) firms; two are California-only (CA). 7 use a generic exception (3.a or 3.c) and 5 do not (3.b).
  2. Only the essential, material or some similar subset of the contract's provisions -- 7 (20%). 4 MS; 3 CA. 6 use a generic exception and 1 does not.
  3. My firm believes 2.b is customary, but as a precaution we prepare remedies opinions as if 2.a were applicable -- 16 (46%). 9 MS; 7 CA. 14 use a generic exception and 2 do not.

a and c together aggregate to 28 (80%).

b and c together aggregate to 23 (66%).

3. Does your firm customarily include a "generic exception" when it issues remedies opinions?

  1. Yes -- 19 (54%). 12 MS; 7 CA.
  2. No -- 8 (23%). 5 MS; 3 CA.
  3. Only in certain types of transactions -- 8 (23%). 6 MS; 2 CA. Examples: secured transactions; leases; leveraged leases; financing transactions; debt financings.

a and c together aggregate to 27 (77%).

4. Please indicate which, if any, of the following types of contractual provisions your firm customarily expressly excludes from its remedies opinions:

35 (100%) use some form of "laundry list".

31 (89%) listed at least 5 items, most far more than that.

5. Which, if any, of the types of contractual provisions referred to in Question 4 does your firm customarily consider to be excluded by an "equitable principles limitation" expressly or impliedly included in an opinion? Specify by reference to letters in Question 4:

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6. In real property transaction opinions, does your firm customarily refuse to issue opinions covering:

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7. Does the following paragraph substantially describe your firm's customary practices in deciding whether and to what extent to conduct legal research in support of a remedies opinion?

When we give a remedies opinion: (i) we do not conduct legal research as to any provision of a contract covered by the opinion unless, in applying reasonable professional judgment to that provision, we recognize, without conducting legal research, that there is a not insignificant degree of uncertainty as to the enforceability of that provision based on the existence of California law directly applicable to our client, the transaction, or both; and (ii) we rely on general contract law principles to support an opinion as to the enforceability of such a provision in the absence of California law that we, in applying reasonable professional judgment to that provision, recognize, in accordance with (i) above, as being directly applicable to our client, the transaction, or both.

  1. Yes -- 29 (83%). 20 MS; 9 CA.
  2. No -- 6 (17%). 3 MS; 3 CA. How do your firm's customary practices substantially differ from this? Examples -- don't know what this means; do appropriate factual and legal due diligence; review each provision for enforceability; do legal research; apply what should know.

8.

  1. Does your firm customarily issue legal opinions governed by the 1991 Legal Opinion Accord of the ABA Business Law Section?
    1. Yes -- 6 (17%). 3 MS; 3 CA.
    2. No -- 29 (83%). 20 MS; 9 CA.
  2. If you answered "Yes" in Question 8.a, are your firm's ABA Accord legal opinions customarily governed by the "California Provisions" as defined in the California State Bar Business Law Section's 1992 Report on the Third-Party Legal Opinion Report of the ABA Section of Business Law?
    1. Yes – 6. 3 MS; 3 CA.
    2. No – 0
  3. If you answered "Yes" in Question 8.a, are your firm's ABA Accord legal opinions in real property transactions customarily issued in accordance with the 1995 California Real Property Legal Opinion Report and the 1998 First Supplement to 1995 California Real Property Legal Opinion Report?
    1. Yes -- 5. 3 MS; 2 CA.
    2. No -- 0

9. [Answer only if your firm customarily issues remedies opinions under the law of states other than California, as well as under California law.] Do your firm's customary practices (as to the form of the opinion or exceptions/limitations/qualifications, as to legal research supporting the opinion, or otherwise) substantially differ when your firm issues remedies opinions under the law of states other than California than when issuing remedies opinions under California law?

22 responses out of 35 respondents (63%)

  1. No -- 16 (73% of 22 responses). 14 MS; 2 CA. 13 of these 16 (81%) use the "essential terms" approach (2.b), a generic exception (3.a or 3.c), or both. Only 1 of these 13 uses the "essential terms" approach but not a generic exception.
  2. Yes -- 6 (27% of 22 responses). 6 MS; 0 CA. Please describe the substantial differences. Examples -- fewer exceptions/qualifications in NY and Illinois opinions; don't use "laundry list" outside CA; exceptions vary according to state law.

10. Would your responses to any of the above questions substantially differ when your firm is requesting a legal opinion rather than issuing one?

See more detailed response chart

11. Would the chair of your firm's Opinion Committee or another representative of your firm be willing to serve as an advisor to the Business Law Section's Task Force on Legal Opinions?

27 affirmative responses (including some current Task Force participants)

12. [Optional] Please attach the form(s) of California remedies opinion, and the applicable exceptions/limitations/qualifications, which your firm customarily issues -- 9 responses included this

13. [Optional] Please note any additional comments you think would be useful to the Task Force on Legal Opinions -- 12 responses to this, summarized as follows:

Task Force should look at inconsistent use of exceptions in lending vs. securities/M&A transactions.

Any State Bar move to an "each and every" approach would put an enormous burden on the opinion giver, multiplying manyfold the number of required exclusions.

Opinion recipients vary greatly as to what they perceive as key elements of opinion. Many prefer specific list of exceptions to highlight potential problem areas re enforceability.

Their opinions use Accord language but don't incorporate or refer to Accord.

Difficult opinion issues include:

  1. Extent of remedies opinion exceptions (the most difficult issue).
  2. Quasi-factual statements, such as "no litigation".
  3. Opinions requiring proof of absence of something, such as "no required consents or approvals".
  4. Attorney-client privilege waivers arising from, for example, nothing has come to our attention re any misleading statements in prospectus.

Would prefer to streamline the opinions process and form a la TriBar, but reluctant to part from the herd. Would like to help the Task Force move in that direction.

Opinion practice getting out of control. Opinions are rarely useful and cause way too much adversity and expense.

"Matters to opine on in various deals"

The Task Force should try to close unnecessary gap between Calif. and NY opinion practices. Would like to help it do so.

Opinions are heavily negotiated, so many times we don't follow our standard practices.

Opinions vary based on circumstances, so "it is misleading to report customary practices".

Need State Bar guidance re Calif. lawyers opining on documents governed by non-Calif. law.

Appendix 7 / Report on Third-Party Remedies Opinions