As the borrower's lawyer, can I give the lender an opinion letter that the lender's own loan documents are legal, valid, binding and enforceable?

Plain-English summary

The inquiring attorney asked whether it is proper for an attorney representing a borrower in a loan transaction to furnish the lender an opinion that loan documents prepared by the lender's counsel are "legal, valid, binding and enforceable."

The panel analyzed the question under Rule 2.3 of the Rhode Island Rules of Professional Conduct, under which an attorney may undertake an evaluation of a matter affecting a client for the use of a third party subject to two conditions: the lawyer must reasonably believe that making the evaluation for a third party is compatible with other aspects of the lawyer's relationship with the client, and the client must consent after consultation. Drawing on the comment to Rule 2.3, the panel emphasized that furnishing a third-party evaluation is a departure from the normal attorney-client relationship, may create a legal duty to the third party, and requires the attorney to guard against collateral considerations affecting independent judgment, such as a fee contingent on the loan closing, pressure on the ongoing client relationship, and exposure to liability if the client later disputes enforceability. On consent, the panel noted the potential coercion where the lender will likely refuse the loan unless the evaluation is furnished.

The panel concluded that, notwithstanding the widespread use of such lender requests, furnishing these opinions is inconsistent with the traditional adversary system, and it declined to extend blanket ethics-panel protection to an attorney asked to furnish an opinion that the lender's loan documents are legal, valid, binding, and enforceable. Without extending protection, the panel advised that it may be proper for the attorney to furnish the requested opinion, but only after concluding, based on careful analysis, that doing so is compatible with the duty to the client and after obtaining the client's freely given consent. The panel added that it would be proper for an attorney to give third-party evaluations limited to well-defined requests for information, as opposed to requests for opinions on questions of law.

Currency note

This opinion was issued in 1991, after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988, and it applies Rule 2.3 as then in force. The Rhode Island Supreme Court later revised the Rules of Professional Conduct in 2007 as part of the nationwide Ethics 2000 process, which renumbered and amended several provisions. 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 mentioned here.

Common questions

Q: Will the panel protect a borrower's lawyer who opines to the lender that the loan documents are enforceable?

A: Under this opinion, no blanket protection. The panel declined to extend panel protection and viewed furnishing such opinions as inconsistent with the traditional adversary system.

Q: Can the lawyer furnish the opinion at all?

A: The panel advised it may be proper under Rule 2.3, but only after the attorney carefully analyzes compatibility with the duty to the client and obtains the client's freely given consent.

Q: What kind of third-party evaluation did the panel treat as clearly proper?

A: The panel said it would be proper to give third-party evaluations limited to well-defined requests for information, as opposed to requests for opinions on questions of law.

Q: What factors threaten the lawyer's independent judgment here?

A: The panel identified a fee that may depend on the loan closing, the risk that declining could undermine the client relationship, and exposure to liability if the client later challenges enforceability.

Background and rules framework

The opinion applies Rule 2.3 (Evaluation for Use by Third Persons), corresponding to Model Rule 2.3, together with its comment. Rule 2.3 permits an evaluation for a third party where the lawyer reasonably believes it compatible with the client relationship and the client consents after consultation. The panel stressed the comment's points that such an evaluation departs from the normal attorney-client relationship and may create a legal duty to the third party, making the propriety highly fact-specific and dependent on the attorney's complete analysis.

Citations and references

Rules of Professional Conduct:

• MR 2.3 (evaluation for use by third persons)
• RI RPC 2.3

Statutes:

• None cited.

Cases:

• None cited.

Other opinions cited:

• None cited.

See also

• RI EAP Op. 95-25: Lender-Borrower Intermediary
• RI EAP Op. 95-17: Representing a Corporation and Stockholder in a Buyout

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%2091-13.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

Digest of Ethics Advisory Panel
Opinion #91-13, Request #93
Issued March 13, 1991

This is in response to an inquiry as to whether it is proper for an attorney who is representing a borrower in a loan transaction to furnish to the lender an opinion that loan documents prepared by lender's counsel are "legal, valid, binding and enforceable."

Under Rule 2.3 of the Rhode Island Rules of Professional Conduct an attorney may undertake an evaluation of a matter affecting a client for the use of a third party, subject to certain limitations, viz, (1) the lawyer must reasonably believe that making the evaluation for a third party is compatible with other aspects of the lawyer's relationship with the client, and (2) the client must consent after consultation.

However, the comment under Rule 2.3 also points out that furnishing a third party evaluation constitutes a departure from the normal attorney-client relationship. In furnishing such an evaluation, the attorney must undertake a careful analysis to decide whether, as a matter of professional judgment, the furnishing of the third-party evaluation is compatible with other functions undertaken for the client.

In the process of undertaking the required analysis, the attorney must make sure that his independent judgment is not affected by any number of collateral considerations including, but not limited to, the fact that the attorney's fee may depend upon consummation of the loan, that the attorney's continuing relationship with the client may be undermined if the attorney does not give the requested evaluation, and that the attorney may be exposed to the risk of liability should his client subsequently take the position that the terms of the loan are not enforceable.

The complexity of the analysis required of the attorney is compounded by the fact that, as pointed out in the comment, the furnishing of an evaluation to a third party may create a legal duty to the third party as well as to the client.

In addition to the above considerations, the second requirement of Rule 2.3 is that the client must consent to the furnishing of the third party evaluation after consultation with the attorney.

In making an independent judgment as to whether the client's consent has been given freely, the attorney must consider the potential coercion which may be imposed upon the client by virtue of the fact that the lender will very likely refuse to grant the loan unless the evaluation is furnished by the attorney.

The above list of considerations is not intended to be all inclusive but it is intended to show that the propriety of furnishing a third party evaluation is very subjective and very much conditional upon a complete analysis by the attorney of the facts and of the parties involved in each particular request.

Page Two
91-13

In view of the above, and notwithstanding the acknowledged widespread use of requests by lenders for opinions from borrower's attorneys, it is the panel's opinion that the concept of furnishing such opinions is inconsistent with the traditional adversary system of lawyering (where all parties to a transaction are represented by their own attorneys).

The panel concludes that it may not extend blanket ethics panel protection to an attorney who has been requested to furnish an opinion to the lender that loan documents prepared by the lender's counsel are "legal, valid, binding and enforceable."

Without extending any protection, the panel advises that it may be proper for the inquiring attorney to furnish the requested opinion but only after he has concluded, based upon careful analysis, that the furnishing of the third party opinion would be compatible with his duty to his client and, also, after he has obtained the freely given consent of his client.

Also, the comment to Rule 2.3 notes that third party evaluations may be performed at the client's direction for the primary purpose of establishing information for the benefit of a third party.

The panel is of the opinion that it would be proper for an attorney to give third party evaluations which are limited to well defined requests for information as opposed to requests for opinions on questions of law.