In 1882, Watson was appointed by the United States President to the position of U.S. District Attorney for the District of Oregon.[1] He kept that position until 1886 when he returned to private practice in Portland, Oregon.[1] In 1883, he married his second wife, Virginia Kinney. He was previously married to Isabella Flint in 1872, and they had two children.[1] James Finley Watson died on June 12, 1897.[1]