From the Wool-sack
| Publication year | 1982 |
| Pages | 1889 |
| Citation | Vol. 11 No. 7 Pg. 1889 |
1982, July, Pg. 1889. From the Wool-Sack
The rain falls on the just and on the unjust fella, but the just gets wet;
The unjust stole his umbrella.
Anonymous
Herewith is another one of my useful (which being useful are infrequent) columns which, if read, will be didactic for some and offensive to others. The educational fluff contained herein is my explanation of why large banks ask small borrower's attorneys to pass on the work of the large bank's attorneys. For the explanation to make sense, a description of the practice is in order.
When banks make large loans they often hire one firm to draft the loan documents and then require lawyers who represent the borrower to write the bank an opinion that the lender's attorney did a phenomenally competent job of drafting the loan documents.(fn1) Thus, for example, if Big Bucks Bank of New York City or Denver decides to lend money to someone living in Wray, Colorado, where the borrower is represented by the firm of Tiny & Small, it will first hire counsel in Denver to draft the loan documents. That firm will usually be the firm of Verbosity, Bigness & Large, because Big Bucks does not think it possible for competent legal work to be done by less than 100 to 200 people at a given time. Although Big Bucks has implicit confidence in Verbosity because it has an a.v. rating in Martindale-Hubbell, Big Bucks' president, vice-president and other officers will all sleep better at night if Big Bucks has one more legal opinion, even if it is only from Tiny & Small. (The reason is explained later.) Therefore, Big Bucks says to the borrower that one of the conditions of the loan is that Tiny & Small approve all the loan documents which were prepared by Verbosity. (Big Bucks assumes that everybody who borrows money is represented by a lawyer, since if people did not need to pay legal fees there would be very little reason to borrow money.)
The procedure which follows is, Verbosity drafts all the notes, deeds of trust, assumption agreements, personal guarantees and other documents which accompany any medium- to large-size loan. If Verbosity has done its job well, the deed of trust will not be a one- or two-page printed form deed of trust, but will be a fifteen- to twenty-page document which not only defines the parties'...
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