Jonathan C. Lipson

Price, Path & Pride: Third-Party Closing Opinion Practice among U.S. Lawyers (A Preliminary Investigation)

This article provides a qualitative empirical analysis of third-party closing opinion practice. This practice has recently generated some controversy because, among other reasons, many of the transactions in issue in Enron were supported by closing opinions. Interviews with lawyers around the nation suggest that the traditional academic view of opinion practice - that it promotes economic efficiency - is helpful but incomplete. Many features of closing opinion practice persist despite demonstrable inefficiencies. Moreover, when the practice improves, it is often non-market forces that create the change. Based on these interviews, the article offers some initial thoughts on why the practice exists, and certain of the functions that it may perform.