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Simpson v. James | 903 F.2d 372 (1990)
If you were negotiating a prenuptial agreement, would you want your attorney to also represent your soon-to-be spouse? If you were selling your business, would you want your attorney to also represent the buyer? In Simpson versus James, we explore the problems that can arise when one attorney represents both sides of a deal.
Sheila Simpson and two others were the sole stockholders of H P Enterprises. When Simpson decided to sell the company, she sought assistance from attorney Ed Oliver. Oliver had previously represented Simpson’s late husband in various matters. At the time, he practiced with the firm Keeney Anderson James, which we’ll refer to as the firm.
A group of investors wanted to buy H P. Oliver represented both Simpson and the investors in completing the sale. He helped the investors form a company known as Tide Creek to complete the purchase. He also drafted the necessary legal documents.
Tide Creek paid a portion of the purchase price up front. The remainder was secured by promissory notes. To protect Simpson’s interests, the investors personally guaranteed the notes. Simpson also received a lien on Tide Creek’s stock.
After the sale closed, the firm continued to represent Simpson on estate and tax matters. When Oliver left the firm, an associate assumed representation of Simpson.
Tide Creek then defaulted on one of the promissory notes. Simpson met with David James, yet another attorney with the firm, who also represented Tide Creek. James restructured the note between the parties. When Simpson asked what James would do if her interests and Tide Creek’s conflicted, he said he would stick with her. Several months later, Simpson again met with James regarding rumors that Tide Creek was going bankrupt. James said that he represented Tide Creek and told Simpson to find other counsel. Tide Creek ultimately filed for bankruptcy. Simpson didn’t recover any of the amounts owed to her.
Simpson sued the partners of the firm for malpractice in federal district court. She alleged that Oliver and James acted negligently by representing both Simpson and Tide Creek. Per Simpson, this joint representation created a conflict of interest and precluded the firm from representing her best interests. The jury found in favor of Simpson. The defendants appealed to the Fifth Circuit.
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