Advisory Comments can be included in that section, especially ones that are borderline Formal Requirements. In any event I agree with Morgenthaler in concept—what I call ‘Special” Advisory Comments should be used as sparingly as possible.
V. Form Title Opinion
The Form Opinion (Appendix B) is designed for use in a unit situation but could be adapted to a multi-tract or single tract situation by omitting the working interest summary at the beginning of the opinion. If the Division of Interest is relatively short, it could be incorporated into the opinion as it is in the Long Form example above rather than being set forth in an exhibit.
Little discussion of the Form Opinion is needed because in a sense this paper so far has been talking about nothing else. It should be no surprise that the “Long Form” ownership table from Appendix A is used. Requirements are organized as described in the preceding section. Lease and assignment summaries are in separate exhibits. There is a Table of Contents near the front of the opinion.
The Form Opinion (Appendix B) is a Drilling and Division Order Opinion. If it was strictly a Drilling Title Opinion, the Division of Interest tables could be omitted.
Incidentally, not all examiners will refer to “Division of Interest.” They may say, “Net Revenue Interests,” or simply “NRI.” A Division of Interest table, after all, is a table of consolidated Net Revenue Interests. I prefer to use the term “Division of Interest.” This may be semantics, but semantics are important to lawyers and often to their clients. Division of Interest connotes Division Order, and the purpose of a Division Order is to divide money. Dividing money is something that clients care about a great deal. Title examiners can show their respect for the importance of this task by labeling the table as the “Division of Interest.” Division order analysts will immediately recognize what is being referred to and generally appreciate (if not insist on) the consolidation of this type data in one place in an opinion.
Now let’s return to the question raised earlier in the “Short Form or Long Form?” section of Part III. When dealing with a simple, basic title what is wrong with one of the simpler title opinion formats such as the either of the “Short Form” opinions in Appendix A? Why is consistency so important?
I believe consistency in title opinion format is important for several reasons. The first reason is law firm branding. If the reader is a lawyer, irrespective of whether the lawyer agrees with the recommendations in this paper, or unless the lawyer is a solo practitioner, the lawyer will always be faced with the issue of consistency between the title opinion format that she or he uses and those used by her or his other colleagues in the same law firm, particularly when a common client is being served. There can be no justification for such differences other than inertia, indifference, and simply not taking the time to reconcile. Clients will notice and will have a less favorable impression of the law firm.
Second, consider the opportunity that having a single, firm-wide consistent title opinion template presents. Most lawyers hate having to bother with things as mundane as formatting and structure of documents. Regardless of what you think a “form” title opinion template should look like, find one and stick with it. Then train your paralegals and assistants to become passionate about form, structure, and above all, consistency. Then you can focus less on format, structure and consistency and more on legal analysis and conclusions, which at the end of the day is what you are being paid for by the client.
The Long Form example may have more detail and be more cumbersome in situations involving a very brief title, but it is nevertheless part of the same wardrobe, so to speak, as the Form Opinion (Appendix B). When all these factors are considered—branding, consistency, and leveraging off paralegals and assistants, the longer length of the Long Form example can be rationalized, even when the underlying title is very simple.
The length and scope of a formal “Limitations” section is another feature of title opinions for which there are considerable differences between examiners. Examiners are sometimes accused of overkill when it comes to Limitations sections in title opinions. Morgenthaler39 has a rule that addresses this, Rule No. 13, “Don’t Try to Limit Your Liability.”40 Morgenthaler, however, was talking more about ethical issues that arise when a lawyer seeks to totally evade liability for a title opinion similar to an abstract company. Morgenthaler’s own form opinion examples contain what he calls “Exceptions,” which are the same as Limitations, although admittedly he is more concise than many other examiners might be (including myself) consistent with his overall philosophy.
My own view is that clients rarely read the Limitations section in title opinions, anyway. But if you are going to have a Limitations section, you might as well make it comprehensive. The larger the law firm the more sensitive firm management may be about malpractice exposure when it comes to title opinions. Prudence may suggest use of as expansive a Limitations section as possible consistent with industry practice (but that would be difficult to define given the disparity among examiners). Going too far in a Limitations section can annoy clients. So tailor the Limitations section accordingly, but whatever version you decide upon, use it consistently throughout your firm.