Can a lawyer who represents the borrower also give the lender a legal opinion that the loan does not violate usury or banking laws?

Plain-English summary

Lawyer A represented a borrower negotiating a bank loan. The bank's policy required the borrower's counsel to render the bank a legal opinion that the loan and its terms did not violate any laws, including usury or similar interest laws. The inquiry asked whether Lawyer A could ethically render such an opinion to the bank.

The opinion concluded that Lawyer A could. It acknowledged that the bank's interest in closing only when assured the transaction did not offend technical banking regulations might conflict with the borrower's desire to close regardless of such technicalities, but concluded that this conflict would not necessarily be disqualifying. In an arm's-length commercial transaction, the opinion reasoned, a lawyer could reasonably conclude that her representation of neither interest would be adversely affected and, having drawn that conclusion, could proceed after fully disclosing the risks to both the bank and the borrower and obtaining the consent of both, citing Rule 5.1(a).

Currency note

The official source states that RPC 121 supersedes RPC 101; treat this opinion as not current. This opinion was issued in 1991, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct, and the conflict provision it applies (Rule 5.1(a)) has since been renumbered and revised. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a borrower's lawyer give the lender a legal opinion on the loan?

A: The opinion concluded yes, where the lawyer reasonably believes neither representation would be adversely affected and both the bank and the borrower consent after full disclosure, citing Rule 5.1(a). Note that RPC 121 supersedes this opinion.

Q: Why wasn't the bank-borrower conflict disqualifying?

A: The opinion reasoned that in an arm's-length commercial transaction a lawyer could reasonably conclude that representing both interests would not be adversely affected, so the conflict was consentable.

Q: Is RPC 101 still good guidance?

A: No. The official source states that RPC 121 supersedes RPC 101, so this page is historical.

Background and rules framework

The opinion applied North Carolina Rule 5.1(a), the conflict-of-interest provision permitting representation despite a potential conflict where the lawyer reasonably believes the representation will not be adversely affected and the affected parties consent after disclosure (corresponding to Model Rule 1.7). The arm's-length, commercial nature of the loan transaction was central to the conclusion that the conflict was consentable.

Citations and references

Rules of Professional Conduct:

• North Carolina Rule 5.1(a) (conflicts of interest; consent after disclosure)
• MR 1.7 (conflict of interest, current clients)

Other opinions cited:

• North Carolina RPC 121 (legal opinion for a nonclient; supersedes RPC 101)

See also

• NC Ethics Op. RPC 121: legal opinion for a nonclient

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-101/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Editor's Note: This opinion was originally published as RPC 101 (Revised).

RPC 121 supersedes RPC 101.

Inquiry:

Lawyer A represents a borrower in negotiating a loan from a bank. The bank has a policy of requiring that counsel for its borrower render to it (the bank) a legal opinion that the loan in question and the terms of the loan do not violate any laws including, without limitation, any usury laws or similar laws relating to the charging of interest.

May Lawyer A ethically render such an opinion to the bank?

Opinion:

Yes, Lawyer A may ethically render an opinion to the bank. While it appears that the interest of the bank in closing the loan only when it can be assured that the transaction does not in any way offend technical banking regulations might possibly conflict with the borrower's desire to close regardless of any such technicalities, such conflict would not necessarily be disqualifying. In a commercial transaction of this sort where parties are dealing at arms length, a lawyer could reasonably conclude that her representation of neither interest would be adversely affected and, having drawn that conclusion, could proceed after fully disclosing the risks to the bank and to the borrower and obtaining the consent of both. Rule 5.1(a).