One of the most obvious implications for all lawyers of the Enron debacle, even before any of the questions of liability of the lawyers involved has been resolved, has been the need to focus on the management of the issuance of all kinds of opinion – and audit – letters. This article will highlight some of the more important considerations that should go into the issuance of legal opinions.
For purposes of this discussion, a legal opinion letter is one issued on behalf of a lawyer’s client, and which is intended by all concerned to be relied upon by third parties who are not the lawyer’s clients. A wide variety of transactions feature a request for a lawyer to issue a legal opinion letter on behalf of his or her client. Perhaps most commonly, a client may request that a lawyer respond to the client’s auditor in connection with an audit of the client’s financial statements. Given that these letters will contain information on which third parties will necessarily rely, they are certainly included within our definition of opinion letters. However frequently requested and given, such requests are not risk free. Both clients and third parties have sued lawyers, and sued successfully, based on the contents of opinion letters. Even when the outcome is favorable to the lawyers, they are forced to spend valuable time and money on their defense – and not all outcomes are favorable.
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