Legal opinion as a useful tool for entrepreneurs
These are the tips for entrepreneurs (and not lawyers) on when and how to use legal opinions.
Suppose you google "legal opinion" today. In that case, most results will, with some delay, have to do with legal opinions on crypto tokens issued as part of ICO projects that prove that the tokens in question are not securities. Unfortunately, during crypto-mania, we have seen legal opinions that were an insult to the legal profession and the name "legal opinion".
However, legal opinions can be a handy tool for entrepreneurs if used wisely. These are the tips for entrepreneurs (and not lawyers) on when and how to use legal opinions.
When should you use/order a legal opinion?
Lawyers love to sell legal opinions. It sounds good, and it's nice to research topics and write papers about them. But when should you, as a business manager or entrepreneur, order a legal opinion?
There are many specific cases, but we want to help you with a more general rule or filter.
In our opinion, three elements must be met for you to order a legal opinion:
- there must be legal uncertainty or a question that cannot be answered quickly and correctly;
- this question relates to an issue that is material to your business and has commercial value;
- the opinion will help you eliminate the uncertainty and focus on growing your business.
There is one more scenario in which you may want to order a legal opinion. That is when a regulator or other public authority asks you for a legal opinion on your company's compliance.
How do you order a legal opinion?
When ordering a legal opinion, you should be clear about your intentions and what you want to achieve with the legal opinion. A competent attorney should explain to you upfront whether such an opinion is plausible and whether it will help you achieve your business goals.
You should require that the legal opinion contain a clear explanation of the facts of the case and a specific, unambiguous, and easily understandable conclusion about those facts.
What you put in, you get out.
You must provide your attorney with structured and clearly labelled relevant information and documents. If you provide your lawyer with irrelevant, lengthy documents and information, they will spend a lot of time going through it and will charge you extra. On the other hand, you should also not withhold relevant information from your attorney, as you are responsible for full disclosure for the opinion to have a meaningful impact.
Your attorney may not know or fully understand the business behind the legal issue. Therefore, you should engage, actively communicate, and try to explain all relevant information. This will help you achieve the desired result and add value.
Secure the right to share the opinion
Often law firms reserve the right for you to share the opinion with third parties only with their written consent. This makes little sense, as you have likely ordered a legal opinion that you want to share. It is normal and understandable that a law firm would not want to have a duty of care to third parties, but you should ask them to allow you to share the opinion with them.
Negotiate the price
In most cases, legal opinions can be agreed upon entirely, or at least largely, on a flat fee basis. It would be best to ask your solicitors to provide you with an estimate before confirming the assignment.
Do not wait for the draft
Discuss the outcome of the expert report with your solicitor beforehand. Don't wait until the draft is ready. Attorneys should research before drafting and usually already know what the outcome will be. You may not want to end up with an opinion that is unfavourable to you.
Ask for an executive summary
If the legal opinion is complex, it will be lengthy. Ask your lawyers to write short, clear and useful opinions, but sometimes that is not possible. In such a case, ask them to put a summary at the beginning of the opinion. The person to whom you submit the opinion will most likely not read all the legal jargon but will only be interested in the conclusion and a brief description of the relevant elements. And that's what an executive summary is for.
Hopefully, these tips will help you better navigate your legal challenges!