A Practical Guide to Drafting a Legal Opinion Using the FIRAC Method

In day-to-day operations, management is often faced with complex business situations that intersect heavily with legal matters, from planned acquisitions, land disputes and large-scale redundancies to changes in shareholding structure. Before making strategic decisions on such matters, management will usually ask the company’s legal department or legal consultant for a Legal Opinion. A Legal Opinion (LO) is a written document containing legal analysis and a professional view on a particular legal issue, based on a set of relevant facts. The main purpose of an LO is not to judge who is right or wrong, but to give an objective view of the company’s legal position, identify risks and recommend the steps to be taken.

In other words, an LO serves as a basis for management to make measured business decisions and minimise potential losses in the future. Drafting a good LO, however, cannot be done haphazardly by simply copying out the legislation. An effective LO must be structured, logical and easy to understand for readers who may have no legal background. To achieve this, legal practitioners universally use a writing framework known as the FIRAC method, which stands for Facts, Issues, Rules, Analysis and Conclusion. Below is a guide to drafting a Legal Opinion by breaking down each FIRAC component.

1. Setting Out the Facts (Facts)

   The first and most fundamental step in drafting a Legal Opinion is to set out the background of the matter in full. The quality and accuracy of an LO depend heavily on this section. If the factual basis is wrong or incomplete, the legal analysis and conclusions that follow are bound to miss the mark. The legal department often receives information from management or clients as a disorganised, unstructured account, sometimes mixed with personal opinion. The drafter’s main task at this stage is to filter all that raw information and classify it into three categories: material facts, legal facts and assumptions.

   • Material facts: Real events, incidents or actions that actually took place. For example: A lent IDR 100 million to B on 1 January 2026.

   • Legal facts: Material facts that have been linked to, and are directly relevant to, legal provisions. For example: the loan was recorded in a written Loan Agreement signed by both parties over a duty stamp.

   • Assumptions: Information, suspicions or statements that cannot yet be verified by physical evidence but must serve as a provisional basis for the LO.

   Some important techniques for drafting the facts section:

   • Arrange the facts chronologically: Order events by when they occurred (date, month, year). A chronological flow makes it much easier for readers to follow the matter from its beginning to the point where the problem arose.

   • Be objective and neutral: State the facts as they are, based on supporting evidence or documents. Avoid judgemental or loaded adjectives. Facts must be objective statements, e.g. “Company A had not made payment by the deadline of 10 October 2026,” not “Company A deliberately delayed payment.”

   • Include a disclaimer for assumptions: If the LO must be completed urgently while some supporting documents have not yet been provided, the drafter must set clear limits regarding those assumptions. For example: “This legal opinion has been prepared on the assumption that all photocopied documents provided by management are true and conform to the originals. Should different facts come to light later, the conclusions of this LO may change.”

2. Formulating the Legal Issues (Issues)

   Once all facts and assumptions have been properly classified, the next step is to formulate the legal issues. Legal issues are essentially the specific legal questions the Legal Opinion must answer and resolve. This section sets the direction: sharp analysis always starts with a focused question. If the issues are too general, broad or vague, the discussion that follows will lose focus and fail to meet management’s needs. Some important techniques for formulating legal issues:

   • Use specific questions: Avoid overly general questions such as “Is termination of this contract valid?” Instead, frame questions that tie the legal facts to their potential consequences. A better example: “Does the vendor’s 14 consecutive days of late delivery constitute breach of contract (wanprestasi), entitling the company to terminate the agreement unilaterally?”

   • Focus on the main problem: Not every disagreement or event in the facts section needs to become a legal issue. The drafter must filter and select the issues that directly affect the company’s rights, obligations or business risks.

   • Break it down into several points: If the case is highly complex, split it into several separate legal questions. For example, the first question addresses the validity of the contract, the second the procedure for claiming damages, and the third potential sanctions from the regulator. This separation makes the analysis neater and more systematic to read.

3. Gathering the Legal Basis (Rules)

   Once the legal issues have been sharply formulated, the next step is to gather the legal basis that will be used to answer them. The Rules section is the drafter’s main scalpel. In corporate law, the legal basis is not limited to legislation issued by the government. It also includes implementing regulations, case law (previous court decisions), general principles of law and even the clauses of contracts agreed by the parties. This is because, under civil law, a valid contract or agreement binds the parties who made it as if it were law (pacta sunt servanda). Some important techniques for gathering the legal basis:

   • Follow the hierarchy of regulations: List the regulations from the highest level of legislation down to the technical level. For example, start with Laws, then Government Regulations (PP), Ministerial Regulations, Regional Regulations and down to Board of Directors’ Regulations or the company’s internal SOPs. Finally, include the specific contract clauses governing the matter.

   • Cite provisions specifically: Avoid merely naming a law in general terms. Cite the relevant article, paragraph and point specifically. If a provision is short and crucial, quote it in full. If it is too long, you may summarise its essence without altering its original meaning.

   • Ensure relevance: Do not include laws or provisions that will not be discussed in the analysis. Every legal basis listed in the Rules section must be directly relevant and must be used to examine the facts in order to answer the Issues. Including too many irrelevant provisions only makes an LO thick but lacking in substance.

4. Conducting the Legal Analysis (Analysis)

   The analysis is the heart of a Legal Opinion. This is where the drafter’s sharpness of thought is truly tested. Good analysis does not merely repeat the facts or copy out the wording of statutory provisions. It is the process of connecting the Rules gathered with the Facts in order to answer the Issues formulated earlier. Some important techniques for drafting the analysis:

   • Discuss systematically: Answer the legal issues one by one in the order of the questions. If the Issues section contains three questions, create three analysis sub-sections to answer each in turn. This makes it much easier for readers to follow the drafter’s line of reasoning.

   • Apply the law directly to the facts: Do not theorise at length. Explain concretely how a rule applies to the actual events the company has experienced. For example: “Under the breach-of-contract provisions, the defaulting party must first be given a warning. Since the company has not yet sent the vendor a formal letter of demand (somasi), the vendor cannot yet legally be declared in breach.”

   • Be objective and look at both sides: A quality LO does not only look for provisions that justify or favour the company’s position. The drafter must be objective and willing to reveal gaps or weaknesses in the company’s legal position. If the company’s position turns out to be weak, say so plainly, along with the arguments the other side is likely to use.

   • Use practical language: Avoid overly theoretical or academic legal debate. Remember that the main readers of this document are management or directors, who do not always have a legal background. They need analysis that is direct, easy to understand and oriented towards the company’s operations.

5. Conclusions and Making Recommendations (Conclusion)

   The final section of a Legal Opinion is the conclusion. For management or directors, this is often the most sought-after page and the one they read first. The conclusion must therefore be concise, clear and go straight to the heart of the matter. A good conclusion does not merely summarise the analysis; it must also recommend the legal steps or solutions the company can take to mitigate risk. Some important techniques for drafting conclusions and recommendations:

   • Answer the legal issues firmly: Give a direct answer to each question in the Issues section. Avoid vague or hesitant wording. If the company’s legal position is strong, say so clearly. If it is weak or risky, state that openly.

   • Offer practical solutions: This is the main added value of an LO for management. Do not leave readers confused after a long analysis. Set out concrete next steps. For example: “As unilateral termination is not possible at this stage, it is recommended that the company first send a First Letter of Demand (Somasi I) to satisfy the requirements for breach of contract.”

   • Do not introduce new facts or law: The conclusion is purely a distillation of the analysis. Do not raise new facts, additional information or provisions that have not been discussed earlier.

Drafting a Legal Opinion using the FIRAC method will greatly help you turn complex legal rules into structured business guidance. By applying this framework, your LO will not only be sharp in its legal analysis but also of high practical value to management when making strategic decisions.

Illustration: Gemini AI