Real Property Section
Background on the Report of the Special Joint
Committee on
Lawyers’ Opinions in Commercial Transactions
of the Maryland State Bar Association, Inc.
and The Bar Association of Baltimore City
January 18, 1989
In January, 1987, the Section of Real Property, Planning and Zoning
and the Section of Business Law of the Maryland State Bar Association, Inc. and the
Banking, Bankruptcy and Business Law Committee of The Bar Association of Baltimore City
formed the Special Joint Committee on Lawyers’ Opinions in Commercial Transactions
(the "Committee") in response to a perceived need for an in-depth review
of practice considerations in connection with the rendering of opinions by attorneys in
commercial transactions in Maryland. The Committee was given a broad mandate to study the
area and make whatever recommendations it deemed necessary and appropriate. On January 18,
1989, the Special Joint Committee completed its Report (the "Report"),
which was published at 45 Bus. Law. 706 (1990).
There was a consensus among the members of the Committee that the
quality of lawyers’ opinions and their value to their recipients could be
significantly improved by the compilation of certain guidelines to assist practitioners in
this area. Prior to the Report there were no clear sources of guidance available to aid a
lawyer in Maryland in rendering an opinion or to assist the party receiving an opinion in
interpreting its meaning and in understanding what steps were taken to reach the opinion
that was rendered.
The Committee consisted of twenty lawyers from Baltimore City and
various counties in Maryland. Bennett Gilbert Gaines, Edward J. Levin, and S. Nelson Weeks
served as Co-Chairmen of the Committee, and Susan J. Mathias served as the Reporter for
the Committee. In order to subject each aspect of the legal opinion to careful scrutiny,
and to involve more lawyers in the process of preparing the Report, the Committee formed
eighteen separate subcommittees and charged each subcommittee with examining a distinct
issue in the opinion process. The membership of many of the subcommittees included lawyers
who were not members of the Committee. Each subcommittee was comprised of both
lenders’ counsel and borrowers’ counsel. A total of forty-four lawyers were
involved in the initial preparation of the Report, as members of the various subcommittees
and the full Committee.
The Committee presented a draft of the Report in connection with a
continuing legal education seminar at the June, 1988 meeting of the Maryland State Bar
Association. The Committee solicited comments on the June, 1988 draft of the Report from
members of the bar in Maryland and lawyers outside of the state, and also from other
interested persons, including lenders and borrowers. The Final Report incorporated a
number of comments and suggestions from people who were not members of the Committee or
any of the subcommittees. Both the Board of Governors of the Maryland State Bar
Association and the Executive Council of The Bar Association of Baltimore City passed
resolutions approving the Report.
The primary focus of the Report is on opinions given by lawyers to
third parties in commercial and real estate loan transactions, typically by
borrowers’ lawyers to lenders. However, the Report also addresses issues that parties
in the process of rendering legal opinions confront in all types of commercial
transactions.
The Committee developed two "Illustrative Opinion Letters"
to illustrate the issues discussed in the Report. The first opinion assumes a commercial
loan transaction where the borrower is a corporation (called the "Illustrative
Commercial Loan Opinion Letter"). The second opinion assumes that the borrower is
a limited partnership and that the loan is secured primarily by real estate (called the
"Illustrative Real Estate Loan Opinion Letter"). The Illustrative Opinion
Letters are attached. Also attached are form certificates prepared to be delivered to the
opinion givers by the borrowers and guarantors that are the subjects of the Illustrative
Opinion Letters.
The Illustrative Opinion Letters incorporate the Report by reference,
and they cannot be understood without understanding the full Report.
In the years since the Report was published, the Illustrative Opinion
Letters have been widely accepted in Maryland-based transactions. Generally,
Borrowers’ counsel are comfortable in rendering opinions based on the Report, and
lenders and their counsel are satisfied to receive such opinion letters. Additionally,
other portions of the Report are very useful, particularly the discussions concerning
ethical considerations in rendering opinion letters and the steps necessary to complete
the legal due diligence attendant to giving opinion letters.
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