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Common Qualifications for an Opinion on Recourse in U.S. Commercial Lending Operations Gail Merel (journalist), A. Mark Adcock, Robert W. Barron, Willis R. Buck, Jr., Jerome A. Grossman, Louis G. Hering, Timothy G. Hoxie, Andrew M. Kaufman, Reade H. Ryan, Jr., Philip B.

Schwartz and Stephen C. Tarry; 70(1): 121-160 (Winter 2014-2015) As a condition of entering into many types of business transactions, one or more parties may be required to provide written comments in favour of other parties to the transaction. These opinions are often referred to as “third-party opinions” because the opinion provider conveys them to one or more parties other than the influencer`s own client. These opinions may cover a range of matters, including, but not limited to, the status and authority of the Company, the proper authorization, execution and delivery of transaction documents by the Opinionor`s own client, and the enforceability of such documents against the Opinionor`s own client in the transaction. Discussions about the scope of these opinions and the extent to which they are qualified are often time-consuming, and the resulting costs borne by the client whose lawyer is called upon to provide the expertise increase considerably during negotiations. This article, which focuses on third-party opinions expressed in the context of commercial lending in the United States, examines a number of reservations that, in the authors` experience, are often included by opinion leaders for a variety of reasons and generally accept opinion recipients and their lawyers. The authors believe that identifying qualifications commonly used and accepted in the U.S. commercial lending market can help streamline the opinion process on many transactions. Start-ups, especially those in exceptional technology industries such as SaaS, blockchain, AI, electronics, semiconductors, energy or others where venture capital funding is needed to launch and scale, should be proactive and anticipate and plan for the inevitable legal advice requirement.

To best prepare your tech startup for funding and success, check out our guide, 5 Fundraising Secrets for Tech Startups. Legal advice is usually prepared and renewed immediately prior to the transaction or performance of the contract to ensure that the document has been prepared in accordance with applicable laws and legal practices. Sometimes it is used for litigation, i.e. for the competent preparation of a legal dispute and a constant strategy of conduct before the courts as an additional argument or legal analysis of evidence. When preparing a legal opinion, lawyers are responsible for it, as they conduct legal and factual research, analysis, and reviews. A legal opinion is often one of the closing conditions of venture capital financing for a U.S. company, especially one founded in Delaware. The founders of these companies will often ask us, “What is legal advice?” and “Why do investors need it?” Below are brief answers to these and other frequently asked questions about legal advice.

Another cost to the company is the time spent – not only in terms of lawyers` hourly rates, but also the fact that preparation, diligence and (in some cases) negotiations related to legal advice contribute to the process of closing the deal. This can be a challenge for companies that need to close a deal on a very tight schedule. In general, there will be a list of assumptions on which the preparation of the opinion is based. All assumptions and aspects on which they are based must be indicated in the opinion. Of course, assumptions should only be made in respect of facts that the lawyer knows or has reason to believe are accurate. To some extent, the use of assumptions stems from cost considerations – a client will often have considerable knowledge of the facts of the case in question, but will not want to pay for the service required to verify those facts. A legal opinion informs the addressee of the legal effect of the conclusion of the proposed transaction. For example, in the context of a cross-border transaction, lawyers in a foreign jurisdiction may advise on the validity, applicability and compliance of a settlement document with the local law of that jurisdiction (e.g. local registration or stamp duty requirements). Legal advice is often sought in cross-border transactions, particularly transactions involving the acquisition of companies, lending and securities transactions, and real estate purchase transactions.

For example, if a transaction involves a Luxembourg entity, the lender may seek legal advice from a Luxembourg law firm to confirm (among other things) that the Luxembourg company is validly incorporated and registered and that the documents it receives have been duly signed and are binding and enforceable. When preparing an expert opinion, the lawyer must take into account who can rely on the expertise. Since the Hedley Byrne case, it has been clear that anyone whose opinion writer knew or ought to have known that he or she would rely on the expert opinion can bring an action against the lawyer if the report was written negligently. The lawyer should therefore insert a restriction that the notice is made available to addressees for their sole use and cannot be made available to another person by them and that no other person can rely on the notice. Notice under section 13.4(1) of the BIA must be given to the trustee. Pursuant to subsection 13.4(2) of the BIA, the trustee must provide a copy to the Superintendent and to any creditor who requests it. The BIA`s notice under section 13.4(1) should contain details of the documents reviewed and the actions taken by appropriate counsel. Investigations typically include a review of the company`s documents (as listed in the company`s register and filed with the company registry), documents prepared for the specific transaction, as well as any relevant filings in all appropriate records covering the search for securities, charges, and similar matters. As with other transaction documents, legal opinions are generally “negotiated”; That is, drafted by one party (the opinion-giver) subject to the review and opinion of the other party (the lawyer representing the addressee of the opinion). Most companies start with their own standard form.

Significant deviations from the standard usually require further discussion and additional internal approvals.