Commentators have defined the term "opinion" in a variety of ways, depending upon the
context in which it is used.
25 In business transactions, a legal opinion regarding a particular issue
is customarily presented in an opinion letter and is widely understood to express the opinion
giver's professional understanding of the legal principles generally applicable to a specific
transaction or applicable to a particular aspect of the transaction.
26 Many commentators view an
opinion letter as a document that provides the opinion recipient with the opinion giver's
professional judgment about how the highest court of the jurisdiction whose law is being
addressed would resolve the issues covered by the opinion letter on the date of the opinion.
is widely recognized that neither an opinion letter nor any particular legal opinion expressed in it
is intended to be -- or is -- a guarantee of a particular outcome.
Some of the more common reasons for the preparation and delivery of an opinion letter
include the following:
Lawyers and clients often cite due diligence as the principal reason for requesting opinion
letters in business transactions. An opinion letter may be one component of a party's due
diligence, but it should not normally be used as a substitute for due diligence performed by the
opinion recipient (whether a party to the transaction or a third party that plays a key role in its
consummation) and its counsel. While the opinion recipient generally has no affirmative
responsibility to conduct due diligence to determine whether an opinion is accurate,
30 receipt of
an opinion letter is not a substitute for the diligence that the opinion recipient should conduct in a
transaction such as, for example, the investigation and related procedures that would provide an
underwriter with a due diligence defense under Section 11 of the 1933 Act. Moreover, an
"opinion recipient has no right to rely on an opinion if reliance is unreasonable under the
circumstances or the opinion is known by the opinion recipient to be false."
25 For instance, Webster's Third New International Dictionary defines an opinion as "a formal expression by an
expert (as a professional authority) of his thought upon or judgment or advice concerning a matter."
Webster's Third New International Dictionary 1582 (1964). With respect to opinions in the legal context,
Black's Law Dictionary refers to "[a] written document in which an attorney provides his or her
understanding of the law as applied to assumed facts." BLACK'S LAW DICTIONARY 1120 (8th ed. 2004). In
the current customary usage, that definition would correspond to the "opinion letter."
26 As stated in the ABA Guidelines, discussing the closing opinion, the opinion provides "the recipient with the
opinion giver's professional judgment on legal issues concerning the opinion giver's client, the transaction,
or both, that the recipient has determined to be important in connection with the transaction."
Where the lawyer is a member of a law firm, the opinion is typically rendered by and in the name of the firm
itself (the "opinion giver"), rather than by an individual lawyer, who is an "opinion preparer."
, Appendix 1 ("Glossary"); TriBar Report § 1.8. As noted in the Remedies Report, in the definition
(Appendix 1) of "opinion preparers," if a particular lawyer takes responsibility for a specific opinion within
the opinion letter, then that lawyer is an "opinion preparer" only as to that opinion and not as to all other
opinions in the opinion letter.
27 See RESTATEMENT § 95 comment c; TriBar Report § 1.2. Back
28 Smith v. Lewis, 13 Cal. 3d 349, 358, 118 Cal. Rptr. 621, 627 (1975). See RESTATEMENT § 52, comment b; ABA Principles § I.D. Back
29 CAL. CORP. CODE §§ 25000 -- 25707. Back
30 See TriBar Report § 1.6; ABA Principles § I.E; FIELD TREATISE § 3.9. But see Greyhound Leasing & Fin.
Corp. v. Norwest Bank, 854 F.2d 1122 (8th Cir. 1988) (under North Dakota law, a lender's own negligence
in not investigating lien status precludes a negligence claim against the opinion giver who relied solely upon
a client's representations without conducting a lien search).
31 TriBar Report § 1.6. Back
III. Legal Standards Applicable to Preparation of an Opinion / Table of Contents