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This is in fact a purely academic question for the attorneys out there, not related to anything, but merely idle curiosity on my part, so please don't waste any time on it.

Suppose a client comes to you for a legal opinion - I don't have any specific subject in mind. Further suppose that in your best judgment, it is a coin flip - 50/50 either way. Do you say that you can't give an opinion? Or do you present both sides, with the potential advantages/disadvantages/consequences for either choice? Or is the answer to this question purely facts and circumstances, so there's no "general" method? I've often wondered about this, but such a situation has never come up - fortunately.

I'd love to hear any opinions, but again, please don't waste your valuable time if it isn't a quick and easy response. Thanks.

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The IRS issued Circular 230 to establish whether a taxpayer may rely on written advice for the purpose of avoiding certain tax penalties when the taxpayer takes a certain position position that the IRS ultimately determines is wrong. This sets the standard and framework for legal opinions in certain areas of tax practice. Check it out if you are interested in a deeper dive and can tolerate some fairly technical material.

Otherwise, legal opinions are just opinions, all over the place in what they cover and how they are expressed. Sometimes the law and facts are such that a legal opinion gives a clear and definite statement without much explanation. A “reasoned opinion” usually includes a discussion of the law, as applied to the circumstances at hand and provides some conclusion that is not definite. A reason opinion may also include many assumptions that are not tested or verified. The opinion may include some measure of confidence about the conclusion, which reflects the uncertainty about the state of law, such as “more likely than not”. Some legal opinions are an exercise in the art of providing a legal opinion that says nothing that one can rely on. Opinions that a retirement plan is “qualified” tend to fall in this category — in my opinion. But such opinions often follow a certain convention that has a commonly understood meaning in the industry that is worthwhile for certain purposes, but not for establishing whether or not a plan is actually qualified.



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Belgarath, a lot of opinions in the tax area just say that there is enough basis for the position that the taxpayer who takes the position would not be subject to penalties other than interest if challenged by the IRS and taxpayer loses. But the point here is that the client is willing to take their chances and just wants a back-up in case of an audit to try to avoid IRS penalties, opprobrium within company or profession, etc. It's legal CYA. 50% would be way above what is necessary for an opinion that the taxpayer can file the return and likely not be subject to penalties (there is never any certainty in life). My guess is it's largely the same in areas other than tax as well, e.g. is anyone going to give a 50+% opinion to an AI company that it can use a voice just like some famous person without permission and not be subject to damages? Probably not, but the AI company would want to be able to say that they had checked with their lawyers and been advised it might be OK before doing it. I'm pretty sure that outside a few areas like muni bonds and secured transactions, maybe some securities law provisions, opinions are rarely something where a law firm is effectively saying,"Yeah, go ahead and do X. We're sure you can and if we're wrong we're good for all of your damages." I've written some plan asset reg opinions (VCOC and REOC) where we were able to give nearly complete assurance on the legal issues, but that is the only area I have experience with where it's been near certainty. The rest were around 50% but really impossible to quantify. And that's another issue, i.e. although people do put percentages on tax opinion levels of certainty, it's ultimately more of a subjective art than a mathematical science.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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Based on how much strength a tax position needs to get the taxpayer an excuse or relief from a tax-reporting penalty, tax practice has developed a special lingo with term-of-art phrases to describe the relative strength of interpretations of tax law.

See my table “How strong is this interpretation of tax law?” attached below.

One of those term-of-art descriptors—“more likely than not”—applies in generally accepted accounting principles for accounting for income taxes.

A less-confident “substantial authority” often lets a taxpayer assert a tax-return position without a particular disclosure that the IRS might view the tax law differently.

(Using Belgarath’s illustration, if a practitioner doesn’t nudge her thinking from 50/50 to 51/49, one would write a substantial-authority opinion. That might be enough to omit a particular disclosure from a tax return, but might not be enough to omit an accrual from financial statements.)

A practitioner who renders written advice often provides a reasoned opinion that at least alludes to, and often describes, other possible interpretations.

Likewise, it’s often useful to present all or some possible interpretations and explain the strengths, weaknesses, and consequences of each choice.

This note is about tax advice a practitioner provides to her client that or who is the taxpayer. An opinion or advice that a nonclient third person may read is a different practice.

And a lawyer’s advice to an employee-benefit plan’s fiduciary often is burdened by recognizing that an ERISA-governed plan’s fiduciary—and, depending on State law and other circumstances, a governmental plan’s or church plan’s fiduciary—cannot invoke the evidence-law privilege for lawyer-client communications against the participants and beneficiaries of the fiduciary relation.

How strong is this interpretation of tax law.pdf

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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You may be under the impression that your legal option must come down to the correct opinion, and that you may be sued for malpractice is you are incorrect. 

In my mediation cases I always make it a point to tell the client's that Mary's lawyer may have one opinion of the outcome of a particular dispute, and that John's lawyer may have a second and different option, and I may have yet a third and different opinion, and that at the end of the day the only opinion that counts is the opinion of the judge knows nothing about the area of law involved, and who hears the case after an expensive trial.

I can find case law on every side of every issue.  I can find you inconsistent statutes and regulations.  The best I can do is say that if Mary is right then the outcome will be favorable to her, and that if John is right the outcome will be favorable to him, and that my opinion as a mediator doesn't count, and that Mary and John may just have to wait and see what the judge decides at the end of an expensive trial.

Now the parties have to do a cost benefit analysis and decide if a compromise settlement might be a better option. BINGO.

The old saying is the opinions are like a*******s, everybody has one.

You opinions better be filled with lots of "but"s and "however"s and "on the other hand"s, and plenty of disclaimers, your know:  "This opinion is not intended to diagnose, treat, cure, or prevent any uncertain issue."

And, of course, don't offer an opinion about anything unless you are an expert and know your stuff. 




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