In a three-page order issued Monday afternoon, U.S. District Judge Lee Rosenthal wrote that she was recommending closing the disciplinary complaint against Jackson Walker stemming from its alleged failure to disclose the romantic relationship between a former bankruptcy partner and a former sitting bankruptcy judge in Houston.
“There is no risk that Jackson Walker and some of its lawyers will escape scrutiny and potential punishment for the failure to disclose that led to this complaint in the first place,” Judge Rosenthal wrote. “Given this fact, and given the fact that the disciplinary charge issued against Jackson Walker seeking sanctions from this court sought relief that this court’s rules do not expressly authorize, the undersigned judge recommends closing the complaint and allowing the many other proceedings against Jackson Walker growing out of the same facts to take their course.”
Jackson Walker issued a statement to The Texas Lawbook on Monday in support of Judge Rosenthal’s order.
“We strongly agree with Judge Rosenthal that the disciplinary action against Jackson Walker should be dismissed,” the statement reads. “After tens of thousands of pages of documents produced in discovery and hundreds of hours of depositions, nothing has changed and the evidence overwhelmingly demonstrates that Jackson Walker acted responsibly and appropriately at all times under the circumstances.”
The case was assigned to Judge Rosenthal in September after U.S. Bankruptcy Judge Marvin Isgur recused himself from all disputes involving Jackson Walker and the U.S. Trustee and referred the law firm for possible disciplinary actions for its failure to disclose the relationship between its former partner, Elizabeth Freeman, and David Jones, who was a sitting bankruptcy judge and presided over cases in which Freeman and the Dallas-based firm were awarded millions in fees.
According to the docket in the disciplinary case, Judge Rosenthal held a hearing Jan. 8, both sides filed sealed responses with the court Jan. 28, and her order recommending the disciplinary case come to a close was issued four business days later.
Judge Rosenthal’s Monday order explains that Judge Isgur “has agreed to withdraw his complaint, given the fact that it seeks sanctions against an entity our rules do not contemplate.” After researching the issue, Judge Rosenthal said she discovered that district court judges have “no authority to impose a financial penalty on a law firm” under the disciplinary rules.
“Indeed, this court has no explicit authority under the disciplinary rules to impose a disciplinary sanction against a law firm, as opposed to an individual lawyer,” she wrote. “The basis for that limitation is that it is often unwarranted and unjust to sanction an entire firm for actions that are primarily, if not entirely, those of a few individuals within the firm.”
“The result would be to sanction many who had no involvement in, or knowledge about, any wrongdoing.”
The case number is 4:24-mc-01523.