XXX
LEGAL OPINIONS - PROCEDURES AND POLICIES
I.Opinions to the firm’s own clients.
Any written communication to a client that states a specific conclusion[1] regarding the legal consequences of a given set of facts must be reviewed and approved by a partner[2] who is an active member of the Department having responsibility for the area of law (or one of the primary areas of law) to which the opinion relates.
II.Responses to audit inquiries.
This Part applies to any response to a client’s request that we provide information to the client’s auditors, without regard to whether any opinions actually are expressed in such response. Such responses should be in the standard form of Document No. XXX as revised from time to time. Please use this form rather than the previous year’s letter regarding the subject client, so that any recent changes in the standard form will be included in your letter.
A.Responses to audit inquiries must be reviewed and approved by XXX, XXX, XXX, XXX, XXX,XXX, XXX, XXX, XXX, or XXX, except that review and approval by one of these lawyers isnot required if:
1.The response has been prepared by a paralegal designated by the Manager of the Corporate Department[3] and will be signed by a partner ;
2.The response is in the firm’s standard form; and
3.The paralegal preparing the letter and the partner who will sign it have completed a due diligence process approved by the Manager of the Corporate Department, have determined that no matters need be described in the response, and have no questions about the response that they think should be addressed by a reviewing partner.
B.If a response describes any litigation, the description should be prepared or approved by the lawyer in charge of the litigation.
C.No opinion regarding the likelihood of an unfavorable outcome or the amount or range of potential loss should be expressed in a response to an audit inquiry without the approval of the Manager of the appropriate Department.[4]
D.Unless no other lawyer in the firm is familiar with the subject matter, the signer of the response should not have a personal interest (as defined in paragraph IV.C.) in the client.
E.We will not respond to a request that we provide information to a client’s auditors unless the inquiry or request is in writing and signed by a representative of the client. In the case of a request that we update a previous response, however, either of the following will suffice: (i) an authorization in the client’s initial inquiry letter for us to respond to any requests for updates received from the auditors, or (ii) an e-mail that appears to be from a representative of the client and asks us to update our response.
F.Our response to an initial inquiry or request for an update must be in writing and preceded by completion of the procedures described in this Part. A lawyer may discuss our response with the auditors, orally or by telephone, to assist the auditors’ understanding of the response, but only after consulting with a partner named in paragraph A of this Part.
III.Third party opinions other than responses to audit inquiries.
This Part applies to any written communication to a person other than the firm’s client or the client’s auditors, regarding a client or a transaction in which a client proposes to engage, which communication states a legal conclusion on which the third party may reasonably be expected to rely. This Part does not apply to a communication to a third party in circumstances in which it is clear that the third party either is not relying on our advice (except as an indication of our client’s position) or has been expressly informed, in writing, that it is not authorized to rely on our advice.
A.Third party opinions addressing issues within the following areas of law must be reviewed and approved by one of the partners indicated for each:
1.Income taxation XXX, XXX.
2.Tax exempt organizations: XXX, XXX, XXX, XXX.
3.Employee benefit plans/ERISA: XXX, XXX, XXX.
4.Trusts and estates/estate and gift tax: XXX, XXX, XXX, XXX.
B.All other third party opinions must be reviewed and approved by XXX, XXX, XXX, XXX, XXX, XXX, XXX, XXX, XXX, XXX, XXXor XXX . If such an opinion addresses issues in specialized areas such as intellectual property, bankruptcy, or health law, review by another partner in the appropriate department may be required, in the discretion of the primary reviewer.
C.Care should be taken to avoid creating or acknowledging lawyerclient relationships that do not otherwise exist. For example, if we represent the borrower in a loan transaction and are asked to give an opinion regarding the enforceability of a guaranty that is being executed by guarantors whom we do not otherwise represent, in lieu of stating in our opinion letter that we represent the guarantors, we should include language such as the following:
Although we do not represent Guarantors (or any of them) in connection with the Loan, the Guaranty Agreement or any of the transactions contemplated by the Loan Documents, this opinion letter includes, at Borrower’s request, certain opinions regarding the Guaranty Agreement.
D.Third party opinions should ordinarily be signed in the firm name, without the signature of an individual lawyer. The lawyer signing the opinion (whether in the firm name or his or her own) should not have a personal interest (as defined in paragraphIV.C.) in the client or transaction to which the opinion relates.
E.If an agreement contemplates the delivery by our client of a legal opinion, the full text of the opinion should, whenever possible, be negotiated early in the process of drafting the agreement and appended to the agreement as an exhibit before the agreement is executed.[5]
F.Under no circumstances will we give an opinion to a party other than our client regarding either of the following:
1.The effect of laws relating to fraudulent transfers in the context of a leveraged buy-out[6]; or
2.Our client’s title to any real or tangible personal property, except that we will opine as to title to real property if we are permitted to base our opinion on a title insurance policy or certified abstract.
G.If a lawyer in the firm is known to the drafter(s) of the opinion to have a personal interest (as defined in paragraphIV.C.) in the client or the transaction, that interest should be disclosed in the opinion. No investigation to determine the existence of such personal interests is ordinarily required, however.
H.The firm encourages the use of the ABA Section of Business Law's Legal Opinion Accord (47 Bus. Law. 167 (1991)) in all appropriate circumstances, both with respect to opinions given by the firm and with respect to opinions received by the firm or its client.
I.We will not, under any circumstances, deliver an opinion that contains a statement or representation that we have done something that we have not, in fact, done. For example, a transactional closing opinion stating that we have examined the governing agreement and related documents must not be delivered until we have received and examined either a signed original or a faxed, photocopied, or conformed copy of the executed documents. If we have reviewed a document in unsigned form and we then receive original, faxed, or photocopied signature pages, bearing the other party’s signature, in reliance on which we are to deliver our opinion, we must, prior to delivery of the opinion, have a letter, EMail message or other written representation from counsel for the other party that confirms that signed counterparts of the signature pages have been attached to the form of document we reviewed.
J.Firm lawyers who draft third-party legal opinions should familiarize themselves with the Legal Opinion Principlesand Guidelines for the Preparation of Closing Opinions published by the American Bar Association Section of Business Law, Committee on Legal Opinions, at 53Bus. Law.831 (1998) and 57 Bus. Law 875 (2002). These documents are also available at
K.Consistent with the Guidelines, we should strongly resist giving opinions to the effect that:
1.Our client is qualified to do business as a foreign corporation (or other relevant entity) in all jurisdictions in which its property or activities require qualification or in which the failure to qualify would have a material adverse effect on the client.
2.All outstanding equity securities of the client are duly authorized, validly issued, fully-paid, and non-assessable (except in transactions in which equity securities of the client are being issued or otherwise sold).
3.Our client possesses all necessary licenses and permits or has obtained all approvals and made all filings required for the conduct of its business, or that it is not in violation of any applicable laws or regulations or in default under any of its contractual obligations.
4.We lack knowledge of particular factual matters (such as the existence of security interests or the existence of inaccuracies in the client’s representations and warranties), except that we may make a statement whether we have knowledge of any legal proceedings that are pending or have been threatened in writing against the client.[7]
5.The client’s representations and warranties in an agreement, or any disclosure document furnished by the client, do not contain any misstatements of material fact or omissions of material fact necessary to make the statements made not misleading, except in connection with a public offering of securities registered under the Securities Act of 1933 or a transaction (such as an issuance of municipal bonds) in which we have participated in the preparation of a disclosure document prepared through a process substantially similar to that customarily followed in connection with such a public offering.
6.Any pending or threatened legal proceeding is likely to have a favorable or unfavorable outcome.
L.Subject to the conditions indicated, we may give an opinion to the effect that:
1.The client is qualified to do business and in good standing as a foreign corporation (or other relevant entity) in specific jurisdictions, if we state that the opinion is based solely upon certificates of public officials of the relevant jurisdictions[8].
2.The client has the corporate power (or, as a partnership or limited liability company formed under its governing statute, has the power) to conduct its business as presently conducted, but only if we (a) make reference to specific factual representations by the client in an agreement, prospectus, other disclosure document, or officer’s certificate regarding the nature of its business and (b) limit the opinion to the business therein described.[9]
3.The client’s securities being issued in the subject transaction are not required to be registered under the Securities Act of 1933 in connection with the subject transaction, unless the securities are being issued to a single investor.[10]
IV.Rules of general application.
This Part applies to all communications subject to PartI, II, or III.
A.Except where signature by a lawyer who is not a partner is authorized by the reviewing partner, an opinion must be signed by a partner[11] who is familiar with the subject matter. Signature by a lawyer who is not a partnerordinarily will be authorized only where no partner has sufficient familiarity with the subject matter of the opinion to be comfortable signing it.
B.Except as provided in paragraph III.D., signatures on opinions should be in the following form:
XXX
By:
(Name of signing lawyer)
C.The reviewing partner should not have a personal interest in the client or any transaction or other matter to which the opinion relates. For this purpose, and for purposes of paragraphsII.D., III.D., and III.G., above:
1.A partner has a “personal interest”in the client if the partner has a financial interest[12] in the client; is an officer, director, or member of the client; or has an immediate family member who has such a financial interest or is an officer, director, or member of the client; and
2.A partner has a personal interest in the transaction or other matter to which the opinion relates if the partner’s potential receipt of a direct personal benefit is dependent upon the closing of the transaction or the outcome of the other matter, but a partner’s interest, as a partner of the firm, in a contingent attorney’s fee is not such a personal interest.
D.A partner who has or shares billing responsibility for the client may not be the reviewing partnerunless the opinion is signed by another partner who has no billing responsibility for the client. It is permissiblefor the reviewing partner to have worked on a transaction or other matter to which the opinion relates or to have participated in the preparation of the opinion or related research or analysis.
E.The purpose of the reviewing partner’s review is not to duplicate the work of the lawyer(s) who participated in the preparation of the opinion and the related transaction, litigation, research, or investigation. The purposes of the review are to:
1.Ensure clarity of expression;
2.Ensure responsiveness to the writing (e.g., audit opinion request or contract provision) to which the opinion is to respond;
3.Prevent overbreadth and the issuance of opinions that are unnecessary or of questionable value or expose the firm to an inappropriate level of risk;
4.Identify and resolve any apparent issues related to the factual or legal basis of the opinions expressed;
5.Ensure that all appropriate “standard” limitations, exceptions, and disclaimers are included; and
6.Promote uniformity of form and consistency in the substance of our opinions.
F.Generally speaking, it is not intended that a reviewing partner review relevant pleadings, documents, or background materials unless the signing lawyer so requests. However, a reviewing partner is encouraged, to the extent he or she deems appropriate, to ask questions regarding the factual and legal basis of the opinion and the nature of the research and investigation that has been done.
G.The reviewing partner’s time should be recorded as billable time on the appropriate client and matter.
H.A copy of the signed opinion, bearing the reviewing partner’s signature (and, in the case of responses to audit inquiries, accompanied by a copy of the client’s inquiry), should be sent to the Records Department for placement in the appropriate firm file. Separate files are maintained for audit responses and other opinions, with a separate file in each classification for each calendar year.
I.A request to a reviewing partner to approve an opinion should be accompanied, if possible, by a copy of any writing to which the opinion is to respond (audit opinion request, contract provision, etc.), as well as the appropriate matter number.
J.The review and approval required by these procedures and policies ordinarily should be accomplished prior to delivery of the opinion or any draft thereof to the client or a third party. If, after an opinion has been approved, substantive changes to the opinion become necessary or desirable, the changes should be approved, prior to delivery, by the partner who originally approved the opinion or, in case of his or her unavailability, by another partner who would have been authorized to approve the opinion originally. If circumstances make it necessary to deliver a draft of an opinion that has not been approved, it is acceptable to do so, provided that it is clearly indicated that the draft is submitted subject to completion of internal review procedures and is, therefore, subject to change.
K.Generally speaking, we do not give opinions regarding the priority of liens or security interests in or on real or personal property, except that we will opine as to the priority of a mortgage or deed of trust on real property if we are permitted to base our opinion on a title insurance policy or certified abstract. Other exceptions to this general rule may be authorized on a case by case basis by any of the partners named in paragraph III.B, above.
L.Any opinion regarding the power and authority of the client to execute or grant, or the enforceability of, a guaranty executed by a Missouri corporation or a security interest in such a corporation’s property to secure another party’s obligation must be qualified in substantially the following fashion (with appropriate revision if the opinion relates to a security interest):
The opinions[s] in paragraph[s] ____ [and ____], above, are subject to the additional qualification that the power and authority of the Guarantor to execute and deliver, and the legality, validity, binding effect and enforceability of the Guaranty may be affected by Article11, Section7 of the Missouri Constitution, which provides that “No corporation shall issue stock or bonds or other obligations for the payment of money, except for money paid, labor done or property actually received ....” The quoted provision of Article11, Section7 of the Missouri Constitution has not been judicially interpreted with respect to its effect on a guaranty executed by a corporation incorporated under Missouri law, and we, therefore, express no opinion as to the ultimate effect a court might give to Article11, Section7 of the Missouri Constitution in an action to enforce the Guaranty.
M.The above review procedures are not a substitute for proper work allocation. The lawyer signing the opinion should consult such other lawyers as may be necessary with respect to issues covered by the opinion that are not within the signing lawyer’s expertise or as to which such lawyer otherwise is not completely comfortable with his or her conclusions.
N.We do not give opinions regarding a client’s or third party’s compliance with conditions to qualification for exemption from or limitation of liability under environmental laws, and we generally do not give other opinions regarding liability under such laws (although exceptions may be authorized on a case by case basis by the Manager of the Environmental Department or a partner to whom the Manager has delegated authority to authorize an exception).
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[1] For this purpose, “specific conclusion” includes (i)a conclusion as to the degree of probability of a particular consequence, such as “It is more likely than not that ....” a transaction will have certain specified tax consequences, and (ii)an opinion quantifying the likelihood of a possible outcome in litigation, such as “there is a 25% chance of a verdict in excess of insurance policy limits;” however, “specific conclusion” does not include a general evaluation such as “We believe you have a reasonable chance of prevailing on this issue,” “We believe it would be reasonable for you to offer [or accept] $XXX to settle this matter,” or “The loan documents appear to be in order, and we believe you are in position to make demand and file suit.”
Historically, there has been some resistance, particularly from litigators, to obtaining a second partner review of opinions to our own client. This resistance apparently is grounded in a desire to respond to the client’s needs in a timely and efficient manner. While this desire is understandable and, in fact, laudable, if an issue is important enough to require a written response stating a specific conclusion, then from the firm’s perspective it is important enough to merit a second partner’s review.