Legal Opinions Resource Center

In 1992, the Legal Opinions Committee of the Business Law Section of the State Bar of Texas (Texas Legal Opinions Committee) issued its Report Regarding Legal Opinions in Business Transactions. 1 Six supplements to the 1992 Legal Report have since been issued to update aspects of the report. 2 Most recently, in 2019, a subcommittee of the Texas Legal Opinions Committee began work on a new Corporate Opinion Report to update sections of the 1992 Texas Report addressing corporate status, corporate power, corporate action, and corporate shares in regard to Texas - formed corporations and opinions often requested in regard to the registration and good standing of corporations formed outside of Texas. 3 This presentation reports on the status of the Corporate Opinion Report and includes information about the background and evolution of reports that address third-party opinion letters 4 and the opinions given therein, and why those reports are important.

The ABA Legal Opinion Resource Center is a website that contains reports and other materials useful in legal opinion practice.

The following are links to works by the Legal Opinions Committee

This is the slide deck of the presentation.

The ABA Legal Opinion Resource Center is a website that contains reports and other materials useful in legal opinion practice.

In 2008, more than 25 bar organizations, including the Texas Business Law Section, adopted the Statement on the Role of Customary Practice in the Preparation and Understanding of Third-Party Legal Opinions. The Customary Practice Statement describes the role of customary practice in rendering and receiving third-party legal opinions.

The Core Opinion Principles are drawn from the Statement of Opinion Practices. The Core Opinion Principles are designed for use by opinion givers who wish to incorporate or attach to their opinion letters a more concise statement of some of the opinion principles included in the Statement.

The drafters of the Statement of Opinion Practices have prepared an Explanatory Note that provides explanatory information regarding the Statement and the related Core Opinion Principles.

The Legal Opinions Committee of the ABA’s Business Law Section and the Working Group on Legal Opinions Foundation, through a Joint Committee of bar group representatives and other opinion practitioners, have sponsored a project to prepare a Statement of Opinion Practices that establishes a national basis for the preparation and understanding of third-party legal opinion letters. Representatives of the Texas Business Law Section’s Legal Opinions Committee have participated in this project. The Statement has been approved by numerous bar groups, including the Texas Business Law Section. In addition to the Statement, the Joint Committee has also published an Explanatory Note and the Core Opinion Principles, both of which have been posted on this website.

The Legal Opinions Committee of the Section has been working with the Legal Opinions Committee of the ABA's Business Law Section and the World Group on Legal Opinions Foundation to craft a Statement of Opinion Practices to be used by practitioners who regularly give legal opinions about various subjects to their clients. You can find the Statement of Opinion Practices, the related Core Opinion Principles and an Explanatory Note in our Legal Opinions Committee page. Click here to see the materials:

Although the classic Seven Deadly Sins 2 do not ordinarily impact the process of drafting an Opinion Letter for the closing of a transaction, the dramatic title of this article is appropriate since it will focus on seven issues that arise in the negotiation and drafting of Opinion Letters that can present significant difficulties for practitioners and their clients. An Opinion Letter can appear in many types of transactions from a settlement agreement, to a divorce decree, a bank loan, or a merger. An Opinion Letter can appear in a variety of formats, ranging from simple one pagers to a 25- page long-form preferred by the public M&A practitioners with an astonishing array of disclaimers, carve-outs and attachments (not to mention the volumes of support documentation and affidavits). Specifically, this paper will address seven topics regarding Opinion Letter that may assist the drafter in improving their clarity and predictability, while limiting the risk of unexpected consequences to the drafter of the Opinion Letter.

As the use of the limited liability company (“LLC”) has significantly expanded, the bar has been required to examine and refine its customs and practices in the giving of closing opinions for LLCs. Historically, the preponderance of entities participating in financing or acquisition transactions was corporations. The swell of LLC formation, however, has outstripped the historical corporate practice, and LLCs are now the common entity used. Because of the several fundamental differences between LLCs and corporations, it stands to reason that traditional “corporate” legal closing opinions must be reconfigured to meet the specific characteristics of an LLC. One cannot simple perform a “global search” and replace “corporation” with “company.” The form of legal opinion for LLCs must be substantially rewritten, and the underlying due diligence tasks to give the opinion must be redefined. Even the topics that are required to be discussed in a legal opinion must be reformulated from the traditional corporate formulations. I plan to cover two areas: general legal principles that are invoked in the preparation and delivery of a closing opinion, and specific opinion provisions for the core opinions that are generally given about an entity in a financing or acquisition transaction. General principles have been affected by the expanded use of LLCs because the general principles depend on customary practices from corporate practice, and customary practices have been adapted to the unique features of an LLC. Further, the Bar has developed new and more precise diction with respect to the actual language used in the traditional core opinions given.

The basic premise for this paper1 is that more scrutiny is being put on (i) registration to do business requirements and (ii) state tax “nexus” standards than ever before. The first source of this scrutiny is state regulation. State budget crunches are causing state revenue departments to look harder at all of the businesses that they may be able to subject to state tax jurisdiction. Similarly, the Texas Secretary of State has stepped up enforcement of its fee and penalty authority against unregistered businesses. For example, the Texas Secretary of State website has a “late fee calculator.”2 If you input data that a foreign corporation has been transacting business in Texas since Jan. 1, 2000 and should have been registered here over the last decade, the registration fee and late fees that would now be required to be paid in order to register in Texas total $9,750.3 The stakes have obviously increased over days of not too long ago when foreign entities would in effect be granted amnesty for prior registration deficiencies. In addition to regulatory concerns, a second major source of scrutiny is contractual in nature and can stem from opinion letter practice or merger and acquisition agreements. Acquisition agreements routinely contain representations and warranties that parties need to understand in the context of maturing state laws dealing the scope of long-arm state tax jurisdiction or “nexus.”

This Article will discuss a few significant topics that have been the subject of recent discussion at the WGLO Seminars and among legal opinion practitioners, including recent litigation and claims against law firms relating to legal opinions. As an initial matter, it should be noted that many of the recent claims against laws firm based upon legal opinions are related to facts assumed or stated, to negative assurances, and to the wording of the opinions as to qualifications and limitations, rather than to alleged mistakes of law in the opinions that are actually expressed.

This Article will discuss a few significant topics that have been the subject of recent discussion at the WGLO Seminars and among legal opinion practitioners, including recent litigation and claims against law firms relating to legal opinions.

This issue includes articles entitled: "Legislation Update on Article 4A Amendment" by Roger Bartlett; "Potential Impact of the Canning Decision on CFPB Rules" by Cheryl Crandall Tangen; and "Legal Opinions Committee Update: Dodd-Frank and Swap Guarantees by and Joint and Several Liability Provisions for Entities that are not Eligible Contract Participants" by Steve Tarry.

This issue includes articles on "Trap for Nonprofit Corporations: Using Single Member LLCs" by Darren Moore and Frank Sommerville; "Form of Nonprofit Corporation Governing Documents Available to Members" by Elizabeth Miller and Frank Sommerville; "Delaware Judge Fines Dole Food Executives $148 Million for Merger Fraud" by Byron Egan; and "Common Qualifications to a Remedies Opinion in U.S. Commercial Loan Transactions" by Gail Merel and Steve Tarry.

This issue includes articles on "Trap for Nonprofit Corporations: Using Single Member LLCs" by Darren Moore and Frank Sommerville; "Form of Nonprofit Corporation Governing Documents Available to Members" by Elizabeth Miller and Frank Sommerville; "Delaware Judge Fines Dole Food Executives $148 Million for Merger Fraud" by Byron Egan; and "Common Qualifications to a Remedies Opinion in U.S. Commercial Loan Transactions" by Gail Merel and Steve Tarry.

This issue includes articles entitled: "Legislation Update on Article 4A Amendment" by Roger Bartlett; "Potential Impact of the Canning Decision on CFPB Rules" by Cheryl Crandall Tangen; and "Legal Opinions Committee Update: Dodd-Frank and Swap Guarantees by and Joint and Several Liability Provisions for Entities that are not Eligible Contract Participants" by Steve Tarry.