Legal opinions — the essentials

A legal opinion, typically in letter form, is a document that sets out opinions as to matters of law. It is not legal advice, and should not be used as a substitute for legal advice. While opinions are expressed in the document, they are not a guarantee of a particular outcome.

The most common uses of a legal opinion include as a documentary conditions precedent, and in restructuring and insolvency scenarios. A legal opinion provides the addressee (usually a financial institution such as a bank) with information as to matters of law to enable the addressee assess the legal risks involved in a transaction. It is common place that a legal opinion is provided at the closing of a transaction (a “closing opinion”), ahead of settlement or drawdown of the first advance.

Customarily, a law firm issues a legal opinion to its own client, often the lender in a financing transaction. This is because, among other things, issuing a legal opinion to a party who is not a client of the law firm can raise issues of professional conduct, conflict of interest and breach of confidentiality.

This guidance note outlines the main purposes of a legal opinion, explains who are the typical addressees of a legal opinion, gives examples of when a legal opinion is used, considers the scope of a legal opinion, and provide some general comments relating to foreign law opinions, including when and why one may be required.

See Legal opinions — the essentials.