## Facts

- Mordecai Weissman founded O.P.M. Leasing Services, Inc. (OPM) in 1970 as a computer leasing company.
- OPM’s business model relied heavily on money advanced by others; company insiders sometimes joked that OPM meant “other people’s machines,” but it in fact stood for “other people’s money.”
- Weissman and Myron Goodman (Weissman’s brother-in-law and business partner) carried out large-scale fraud and deception to make OPM appear successful while it was losing money at increasing rates.
- Numerous financiers, lawyers, bankers, and other businesspeople interacted with OPM in ways that, through ignorance, poor judgment, or self-interest, helped keep OPM’s fraudulent operations going.
- Singer, Hutner, Levine & Seeman, P.C. (Singer Hutner) served as OPM’s outside general counsel from 1971 through September 1980 and did not fully sever its relationship with OPM until December 1980.
- Andrew Reinhard, an associate and later partner at Singer Hutner, brought OPM’s business to the firm.
- Singer Hutner closed dozens of lease-financing transactions for OPM and received approximately $7.9 million in fees during the representation.
- Evidence indicated that although Reinhard may not have known of OPM’s fraud at the beginning, he eventually became a knowing participant.
- In June 1980, Goodman confessed certain prior fraudulent activities to a Singer Hutner partner; the firm retained outside ethics counsel for advice on its professional responsibilities.
- Despite the confession and the ethics consultation, Singer Hutner continued to close lease financings for OPM without verifying or investigating transaction facts.
- Goodman continued to minimize the scale of OPM’s misconduct when dealing with Singer Hutner’s attorneys.
- With ethics counsel’s approval, Singer Hutner voted in September 1980 to resign as OPM’s counsel, but described the resignation in a misleading way as a mutual decision by the firm and OPM.
- Singer Hutner’s ethics counsel advised that the firm could not ethically warn OPM’s successor counsel about the risk that Goodman would use new lawyers to facilitate fraudulent financings.
- OPM’s successor counsel, unaware of the risk, later assisted in closing six additional fraudulent lease-financing transactions.
- In the bankruptcy proceedings that followed OPM’s collapse, the court addressed disputes tied to the role of OPM’s former counsel in transactions connected to the fraud and the estate’s efforts to examine and pursue claims based on that conduct.

## Issues

1. After learning of client-related fraud, what duties did OPM’s outside counsel have regarding continued transaction work, including whether it could keep closing lease-financing deals without verifying key facts?
2. Can a law firm face liability in the bankruptcy context for continuing to provide transactional services that help effectuate a client’s fraudulent scheme once the firm has notice of prior fraud?
3. How does the duty of confidentiality limit a withdrawing law firm’s ability to warn successor counsel or other parties about a client’s past or ongoing fraudulent conduct, and what actions short of disclosure are required to avoid further assistance?

## Decision

- The court treated Singer Hutner’s post-notice conduct—continuing to close lease financings without meaningful factual checking after learning of fraud—as conduct that could support serious allegations of attorney misconduct connected to the fraudulent scheme.
- The court recognized that attorney confidentiality restricts voluntary disclosure of client confidences to successor counsel and third parties, even when withdrawal is being considered or has occurred.
- The court also made clear that confidentiality is not a license for lawyers to keep providing services that facilitate fraud; once red flags are known, counsel must avoid further assistance that would advance wrongful conduct.
- The court declined to treat ethics advice and a formal resignation, standing alone, as automatically eliminating exposure for legal work performed after counsel was alerted to fraudulent activity.

## Legal Principles

- Lawyers may not knowingly assist a client’s criminal or fraudulent conduct; awareness of fraud triggers duties to stop providing help that furthers the wrongdoing.
- Where a firm learns of facts indicating that transactions are being used to defraud others, continuing to document and close similar deals without reasonable verification can create legal and ethical risk.
- The duty of confidentiality generally bars a withdrawing lawyer from warning successor counsel or counterparties about client confidences, absent a recognized exception or client consent.
- Withdrawal may be required when continued representation would involve assisting fraud, but withdrawal does not by itself resolve responsibility for prior or continued involvement in suspect transactions.
- In bankruptcy, the estate may pursue remedies tied to prepetition professional conduct that allegedly contributed to losses associated with the debtor’s fraudulent operations.

## Conclusion

In re O.P.M. Leasing Services, Inc. (Bankruptcy No. 81 B 10533) centered on OPM’s fraud-driven lease-financing business and the conduct of its former outside counsel, Singer Hutner, including continued deal closings after learning of prior fraud, the limits that confidentiality placed on warning successor counsel, and the potential for estate claims based on legal services that allegedly helped extend the fraudulent scheme.


In re O.P.M. Leasing Services, Inc., Bankruptcy No. 81 B 10533 (1983)