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The Limits of Lawyering: Legal Opinions in Structured Finance

58 Pages Posted: 3 Aug 2005 Last revised: 11 Nov 2009

Steven L. Schwarcz

Duke University School of Law

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Significant controversy surrounds the issuance of legal opinions in structured finance transactions, particularly where accountants separately use these opinions, beyond their traditional primary use, for determining whether to characterize the transactions as debt. Reflecting at its core the unresolved boundaries between public and private in financial transactions, this controversy raises important issues of first impression: To what extent, for example, should lawyers be able to issue legal opinions that create negative externalities? Furthermore, what should differentiate the roles of lawyers and accountants in disclosing information to investors? Resolution of these issues not only helps to demystify the mystique, and untangle the morass, of legal-opinion giving but also affects the very viability of the securitization industry, which dominates American, and increasingly global, financing.

Keywords: structured finance transactions, accountants, investors

JEL Classification: M41, M45, G32, G38, K22

Suggested Citation

Schwarcz, Steven L., The Limits of Lawyering: Legal Opinions in Structured Finance. Texas Law Review, Vol. 84, Fall 2005; Duke Law School Legal Studies Paper No. 69. Available at SSRN:

Steven L. Schwarcz (Contact Author)

Duke University School of Law ( email )

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