In an opinion entered on March 24, the Eighth Circuit Court of Appeals affirmed an order requiring an attorney to disgorge fees he received to represent a Chapter 13 debtor (James McGregory) when that attorney later represented McGregory and Wells-Fargo bank in a post-petition transaction. The attorney, Ross Briggs, represented the debtor in a Chapter 13 case filed in 2002. In 2004, Briggs got a job with Wells Fargo Bank as a "home mortgage consultant" arranging refinancing for Chapter 13 debtors in other parts of the country. Although he stopped taking new files, he continued to represent clients for whom he had already filed bankruptcy cases. In his capacity with Wells Fargo, Briggs arranged transactions that allowed debtors to refinance their homes, make lump sum payments to their trustees and receive their discharges early. Because he felt what he did benefited other debtors he worked with, Briggs "concluded that he was ethically bound to offer such services to his own law clients where the circumstances warranted such consideration." In this case, Briggs arranged a refinancing package that lowered his (former) client's interest rate and monthly payments, provided sufficient funds to pay all allowed claims in his Chapter 13 case at 100% and leave some cash left over. Briggs filed a motion on the debtor's behalf seeking authorization to incur debt to enter into the refinancing agreement. The motion disclosed the dual representation and stated that the debtor consented but did not disclose that Briggs would receive a commission from the transaction. The bankruptcy court granted the motion. Three days before he filed the motion, though, the bankruptcy court issued an order in another case finding that Briggs's dual representation of another debtor and Wells Fargo was an actual conflict of interest. The court ordered Briggs to disgorge most of his fees and submit a list of all cases in which he arranged similar transactions. (Briggs has appealed that order, and the appeal is still pending.) This prompted the Chapter 13 Trustee to file a motion seeking denial and disgorgement of the fees Briggs had received in the McGregory case. The bankruptcy court granted the motion, found a conflict of interest and ordered Briggs to disgorge his fees. In its opinion, the Eighth Circuit concluded that this sort of dual representation, "particularly in the bankruptcy context, presents such an inherent and impermissible conflict that it cannot be waived." Although Briggs was not acting as Wells Fargo's attorney in the transaction with the debtor, "but rather was acting as its agent, no attorney could reasonably believe that the representation of a debtor in these instances might not be adversely affected by the simultaneous representation of the lender." The court cited various cases in support of its conclusion that this sort of conflict all by itself -- even though the debtor was not harmed -- is enough to require disgorgement. Briggs's appellate brief is available at http://www.ca8.uscourts.gov/briefs/06/01/appellant/056054_1br.htm . The Trustee's brief is available at http://www.ca8.uscourts.gov/briefs/06/02/appellee/056054_1br.htm . Briggs's reply brief is available at http://www.ca8.uscourts.gov/briefs/06/02/reply/056054_1br.htm . And if you STILL haven't had enough, oral arguments are available as both streaming audio http://8cc-www.ca8.uscourts.gov/OAaudio/2006/3/056054.ram and a downloadable file http://8cc-www.ca8.uscourts.gov/OAaudio/2006/3/056054.rm . Mac