Frequently Asked Questions

1. Q: What is a legal opinion letter?
   A: A formal document drafted by a lawyer expressing their professional judgment on a specific legal matter.
2. Q: Does a legal opinion letter guarantee a particular outcome?
   A: No, it’s not a guarantee but rather a reasoned analysis based on provided facts and the attorney’s understanding of the law.
3. Q: What types of transactions commonly require legal opinion letters?
   A: Business transactions (whether corporate, LLC, or other), real estate transactions (including related to loans), and other types.
4. Q: How do legal opinion letters serve as risk management in business?
   A: They provide confidence to parties such as (but not limited to) buyers, company owners / business leaders, and lenders.
5. Q: What role do legal opinion letters play in real estate transactions?
   A: They can assess title/ ownership issues, seller qualifications, and other deal factors.
6. Q: How do legal opinion letters help parties make business decisions?
   A: By providing clear, unbiased assessments that help parties avoid legal non-compliance, make informed decisions, avoid costly disputes, and close deals with greater certainty.
7. Q: What should a legal opinion letter explain at the outset?
   A: The purpose of the letter and the specific legal(s) issue being addressed.
8. Q: What critical section defines the boundaries of the lawyer’s work and assessment?
   A: The section stating assumptions made and limitations on the scope of their opinion and/or their retention.
9. Q: How should a legal opinion letter be written in terms of style and content?
   A: It should be thorough yet concise, detailed yet reader-friendly, and clear-cut without oversimplifying the issues. This can be a challenging balance to strike.
10. Q: What level of care must an attorney exercise when writing a legal opinion letter?
    A: The lawyer must exercise a high degree of care and diligence, often involving extensive research and reviewing complex documents.
11. Q: What is meant by an attorney having to “prove a negative” in a legal opinion?
    A: An example is when a client asks the lawyer to (hopefully) determine that a business activity is not prohibited by law, which can sometimes be challenging to definitively establish.
12. Q: What duty does the attorney have regarding the assessment provided?
    A: The lawyer has a duty to provide an honest and objective assessment, including identifying situations where the answer is not entirely clear.
13. Q: What are the owners of an LLC traditionally called?
    A: The “owners” of a Limited Liability Company are traditionally referred to by attorneys as the LLC’s “Members.”
14. Q: What are the main documents needed for transferring LLC ownership interests?
    A: Key documents include the Membership Interest Transfer Agreement, LLC Resolution, Operating Agreement amendments, Secretary of State filings, and potentially IRS filings.
15. Q: Is there a difference between “Members” and “Economic Interest Owners” in LLCs?
    A: Yes, there can be “Members” and “Economic Interest Owners” and those are not the same thing, though this varies from state to state.
16. Q: Is a contract to buy / sell / transfer business ownership a public document or a private one?
    A: Typically, this is a private document not “filed” with any agency or other third party.
17. Q: What type of contract is it?
    A: The purchase contract is often called a “Membership Interest Transfer Agreement”, although there are numerous different names and titles used.
18. Q: Does the owner (“Member”) selling some or all of their interests in the business receive the purchase money up front?
    A: Not always. Often times, the purchase money is paid over a period of months or even years. In such situations, having an attorney provide detailed work is of the utmost importance.
19. Q: What is an LLC Resolution and when is it needed?
    A: An LLC Resolution is a document that permanently records key decisions and votes by the LLC, particularly for fundamentally important actions like transferring membership interests.
20. Q: What are the basic elements of an LLC Resolution?
    A: Basic elements include header/title, formal LLC name, parties to the Resolution, background/context, description of circumstances, what was resolved to do, date, and signature lines.
21. Q: Is an LLC Resolution a public or private document?
    A: An LLC Resolution is typically a private internal document rather than something filed publicly, though it’s not necessarily forever confidential.
22. Q: What are the three common scenarios for Operating Agreement changes during ownership transfers?
    A: The three scenarios are: amending an existing written Operating Agreement, replacing an existing Operating Agreement entirely, or creating the company’s first written Operating Agreement.
23. Q: How long are typical Operating Agreement documents?
    A: An Amendment to Operating Agreement is often 1-2 pages long, while an entire Operating Agreement is typically between 10 and 50 pages long.
24. Q: Does an LLC Operating Agreement need to be notarized?
    A: No, the law does not require an LLC Operating Agreement to be notarized or witnessed by third parties, though individual companies could theoretically require it.
25. Q: What is the most common Secretary of State filing when LLC ownership changes?
    A: The most common change would be filing an Amendment to Articles of Organization that identifies the changes in ownership structure.
26. Q: When might a Registered Agent change be needed during ownership transfers?
    A: If the Registered Agent has been an outgoing LLC Member, it would almost certainly be preferable to change the identity of the Registered Agent by filing documentation with the Secretary of State.
27. Q: Are Secretary of State filings always required for ownership changes?
    A: No, ownership changes can sometimes result in new filings with the Secretary of State, but whether such filings should be made depends on each specific circumstance.
28. Q: Can a single attorney represent both the buyer and seller in an LLC ownership deal?
    A: No, a single lawyer/law firm should not, and usually could not, represent both the buyer and the seller due to conflicts of interest.
29. Q: Can an attorney serve in a neutral role without representing any particular party?
    A: Yes, this is an underutilized scenario that can work well and save everyone significant time and money, though it can be tricky or awkward.
30. Q: Can the same attorney represent the LLC and individual members?
    A: It depends and can get tricky – a lawyer typically can represent the LLC and aligned owners (particularly non-buying/selling owners), but cannot give conflicting advice to parties with opposing interests.
31. Q: What is Option 1 for expanding an out-of-state company into North Carolina?
    A: Keep your out-of-state LLC open in your original state but also register it with North Carolina’s Secretary of State as a “foreign” business.
32. Q: What is Option 2 for expanding into North Carolina?
    A: Start a new affiliated company or subsidiary in North Carolina – creating a separate but related business entity in NC while keeping your original out-of-state LLC open.
33. Q: What is required in North Carolina regardless of which expansion option you choose?
    A: You must have a registered agent with a “continuous presence” in NC, which might be a law firm, other business entity, or an individual person. There are some built-in advantages to having a law firm handle that role.
34. Q: What are common reasons business owners want “just a very basic contract”?
    A: They want to understand it themselves, think legal fees will be less expensive, don’t want to scare the other side away with intimidating documents, and people generally have short attention spans.
35. Q: Are most of the details in longer contracts unnecessary?
    A: No, most of the time the “details” which cause some to think the contract is “too long” are important or could become important in protecting the parties.
36. Q: Do you drive without a seat belt?
    A: Probably not! Don’t “drive” forward with your legal situation without having proper legal protections in your contract.
37. Q: What is one of the most frequent problems business lawyers encounter with contract changes?
    A: Changes were made to a section of a legal agreement but the parties failed to realize that the change should have resulted in other content in the contract being adjusted.
38. Q: Why do people make these mistakes?
    A: Everyone has “swiss-cheese” knowledge (holes in their understanding), especially in fields which are not their own, so non-experts won’t know enough to avoid these sorts of mistakes.
39. Q: Do some lawyers also make this mistake?
    A: Absolutely. A lawyer may not realize this concept, or may be lazy, or may (sometimes understandably) unintentionally “assume” that the item being changed wouldn’t usually require other edits to the contract.
40. Q: Is a legal judgment always fixed once entered?
    A: No, in the sense that judgments can often be negotiated even after entry, depending on the circumstances.
41. Q: Why would a creditor agree to negotiate a judgment?
    A: Creditors may prefer partial payment, quicker resolution, or avoiding the cost of further collection attempts.
42. Q: What options might a debtor have when negotiating?
    A: Debtors can pursue lump-sum settlements, structured payments, and/or reduced interest and fees (among other options).
43. Q: Is attending a foreclosure hearing optional for borrowers?
    A: While technically optional, attending gives borrowers a chance to be heard and potentially affect the outcome.
44. Q: What happens if a borrower doesn’t show up?
    A: The lender’s evidence may go uncontested, increasing the likelihood of foreclosure moving forward.
45. Q: How can attendance help the borrower?
    A: Borrowers can present defenses, request delays, and/or demonstrate efforts to resolve the debt.
46. Q: Are arbitration costs similar to court filing fees?
    A: No—arbitration is often more expensive, with arbitrator fees adding significant cost.
47. Q: What factors influence arbitration fees?
    A: Factors include the arbitrator’s experience, case complexity, and the length of proceedings.
48. Q: How are arbitrators usually paid?
    A: Arbitrators typically charge hourly or daily rates, plus administrative fees.
49. Q: Do parties have a say in selecting an arbitrator?
    A: Yes—parties often participate directly in choosing the arbitrator or panel.
50. Q: What qualities should be considered?
    A: Expertise, neutrality, reputation, and relevant subject matter knowledge are key.
51. Q: Can parties agree on specific arbitrators in advance?
    A: Yes, contracts can pre-name arbitrators (which may not be a great idea) or specify the process for selection.
52. Q: If a lawsuit is filed despite an arbitration clause, what can a party do?
    A: The party can move to compel arbitration and ask the court to stay the lawsuit.
53. Q: Why would a lawsuit be filed instead of going to arbitration?
    A: Sometimes one party ignores or challenges the arbitration clause.
54. Q: Who decides if arbitration is required?
    A: Courts generally decide whether the arbitration agreement is enforceable.
55. Q: What’s one of the first considerations when starting a business?
    A: Choosing the right legal structure, such as LLC, corporation, or sole proprietorship (hint: a sole proprietorship is often not the best idea).
56. Q: Why is funding an early factor to address?
    A: Businesses need realistic plans for startup capital and ongoing operating costs.
57. Q: How important is regulatory compliance at the start?
    A: Very—licenses, permits, and registrations must be in place to avoid legal issues.
58. Q: What does a registered agent do?
    A: They receive official legal documents, including lawsuits and state correspondence.
59. Q: Can a business serve as its own registered agent?
    A: In many cases, yes—but it may not be practical if consistent availability is needed.
60. Q: Why hire a professional registered agent service?
    A: To ensure reliability, maintain privacy, and avoid missing critical notices.