A lawyer is asked by a bank to provide an opinion letter to a potential borrower regarding the borrower's legal capacity to enter into a complex loan agreement. The borrower is a long-standing client of the lawyer, though not for matters related to this loan. The lawyer reviews the borrower's corporate documents and personal financial statements, which reveal a potential undisclosed liability that could affect capacity. The lawyer's primary concern in preparing this evaluation for the bank is:
- AMinimizing the risk of the borrower being denied the loan due to the liability.
- BProtecting the borrower's confidentiality regarding the undisclosed liability.
- CEnsuring the opinion letter accurately reflects the borrower's legal capacity, including any relevant liabilities.
- DAdvising the borrower on how to restructure their finances to avoid disclosing the liability.
Show answer & explanationAnswer & explanation
Correct answer: C. Ensuring the opinion letter accurately reflects the borrower's legal capacity, including any relevant liabilities.
When a lawyer acts as an evaluator for a third party (the bank), the primary duty is to provide an objective, accurate, and candid assessment of the matter being evaluated. This duty of candor to the third party generally overrides the duty of confidentiality to the client with respect to the specific subject of the evaluation, especially if the client has consented to the evaluation. The opinion letter must reflect the true legal capacity, including any relevant liabilities.
Why the other options are wrong
- A. This would prioritize the client's business interests over the evaluator's duty of candor to the third party.
- B. While confidentiality is a general duty, in an evaluation for a third party, the scope of the evaluation dictates what must be disclosed for accuracy.
- D. This would involve counseling the client to potentially mislead the bank, which is unethical and contrary to the evaluator's role.
Evaluator: Objectivity and Candor
A lawyer acting as an evaluator for a third party must provide an objective, accurate, and candid assessment of the client's situation as it pertains to the scope of the evaluation, even if adverse to the client.
- Primary duty is to the integrity of the evaluation.
- Information must be accurate and complete.
- Candor to the third party is paramount within the scope of evaluation.
Memory trick: Evaluators Ensure Exactness and Expedite Evidence.