The Gazette 1982

april 1982

g a z e t t e

Practice Notes Opinion Letters

for him to examine the documentation and to research the relevant law in the depth which he would wish. (e) The scale of transactions where such opinions are required is often very substantial, with the result that the degree of exposure for the solicitor giving the opinion is frequently beyond the levels of insurance cover normally carried or which could be obtained at a reasonable cost. (f) The giving of the opinion may render the solicitor liable for negligence at the suit of parties other than his own client, to whom he would otherwise have no liability. 3. Those who favour — or at least do not oppose —this practice, advance the following arguments in favour of their views:— (a) The appearance of a conflict of interest is illusory. It is the normal duty of a solicitor to see that formalities are correctly complied with and that documents are effective to achieve the parties' intentions. (b) Normally it will be easier for a solicitor familiar with his own client's affairs to give the desired opinion than to satisfy the detailed and often onerous requirements of the other party's solicitors. Thus, the issue of the opinion will save both time and money for all concerned. (c) The drafting of an opinion (like most drafting) concentrates the mind wonderfully, and it is salutary to have to review an entire transaction carefully and comprehensively just before completion. (d) If an opinion is clear as to what it covers and the solicitor issuing it has done his work properly, he should not be exposed to any undue risk of liability. 4. While the Company Law Committee does not propose, at this stage, to choose between the foregoing points of view, it suggests that any solicitor who agrees to give an opinion of the type described above should consider the following points:— (a) He should explain to his client that giving the opinion may restrict his ability to defend the client in the event of a dispute occurring between the parties. (b) He should state clearly the persons to whom the opinion is addressed, the assumptions on which it is made (e.g. the accuracy of copy documents, the continuing validity of consents, the tax residence of the parties) and the reservations to which it is subject (e.g. that any foreign judgment may, in certain circumstances, be reviewed by the Irish Courts). (c) He should take great care to limit its terms to matters of Irish Law and to facts within his direct knowledge, as to the correctness of which he has satisfied himself. (d) He should not include in his opinion phraseology which may be used in other jurisdictions but the meaning of which is unclear in Irish law.

1. The Law Society's Company Law Committee is aware that it has become increasingly common, particularly in international Financing transactions, for Irish solicitors to be asked to provide formal written opinions on various matters, including:— — the legal standing of the client company involved and its power to enter into the transaction; — the validity and enforceability of the commitments entered into by the client; — the adequacy of any governmental or other approvals required; — the stamp duty or other taxation implications of the transaction; — the validity of a provision choosing a foreign law as the proper law of the contract; — the ability of the Irish party to submit to the jurisdiction of foreign courts. 2. Views amongst practitioners as to the desirability of this practice differ considerably. The objections of those who consider it an undesirable development may be summarised as follows:— (a) In the event of a dispute between the parties to the documents to which the opinion relates, the solicitor providing the opinion may be inhibited from contesting, on behalf of his client, the validity or enforceability of any provision contained in those documents. Even if the solicitor felt free to represent his client in such a dispute, a successful outcome might well result in the solicitor becoming liable to the other party on foot of his opinion. (b) In giving such an opinion, the solicitor concerned will be obliged to make full disclosure of any doubts he may have concerning the validity or enforceability of the documents concerned or concerning any other matter on which he is asked to opine. This may not be in his clients' best interest, since the client will — at this stage of the transaction — be anxious that his solicitor's opinion should be unqualified. (c) The solicitor concerned may have advised in detail, both orally and in writing, on numerous complex issues during the course of the transaction. It may be difficult for him to draft a single opinion letter (or, more likely, modify one presented to him for approval) which adequately incorporates all the advice he has already given. (d) There is frequently great pressure on the solicitor concerned to provide the opinion with the least possible delay and expense; this may make it difficult

(e) If, as a consequence of issuing the opinion, the number of possible plaintiffs against the solicitor concerned is multiplied, the increased risk can be reflected on the fee charged. • 85