Dallas-based law firm Jackson Walker has reached an agreement with Basic Energy Services’ liquidation trustee to bring an end to litigation over an undisclosed relationship between a former firm partner and a former sitting bankruptcy judge, Bloomberg Law first reported Friday afternoon.
Under the terms of the settlement, Jackson Walker will pay $783,000 to the U.S. Trustee, and the funds will then “be distributed pursuant to the terms of the confirmed plan in the bankruptcy case.” Jackson Walker issued a statement to The Texas Lawbook indicating more settlements will be filed soon.
“We have always said that we regret being misled in this matter by our former partner, and we have continued to proactively reach out to other parties to try to resolve this matter in a constructive fashion,” the statement reads. “We are disappointed that the U.S. Trustee, which is charged with resolving these matters, has done nothing to assist in this process.”
The settlement comes in one of the more than 30 cases where the U.S. Trustee is trying to claw back millions in fees awarded to Jackson Walker in cases where former bankruptcy judge David Jones served as judge or mediator. Those efforts began after a previously undisclosed secret romantic relationship between Jones and then-Jackson Walker bankruptcy partner Elizabeth Freeman became public. Jones resigned his bench in October 2023, and Freeman left the firm in December 2022.
The two-week trial is currently slated to begin May 12 before Chief U.S. Bankruptcy Judge Eduardo V. Rodriguez in Houston.
Former judge Jones entered an order Sept. 29, 2022, awarding Jackson Walker $1,543,432.34 in fees for its work on the Basic Energy Services bankruptcy. The settlement is for 50.7 percent of that award.
Counsel for the liquidation trustee, David Dunn, is Aaron M. Guerrero, Ken Green and Bryan Prentice of Bonds Ellis Eppich Schafer Jones. The lawyers did not immediately respond to an email seeking comment late Friday afternoon.
In the 11-page document filed to U.S. Bankruptcy Judge Christopher M. Lopez Friday, the liquidation trustee wrote that he “is of the firm belief that the settlement agreement is in the best interest of the creditors as the settlement agreement removes any uncertainty of litigation, stops the litigation trust from incurring further attorney’s fees and expenses in connection with these disputes and provides a substantial recovery for the benefit of the creditors.”
The case number is 21-90002.
In the still-pending proceeding where the U.S. Trustee is attempting to clawback millions in fees, Jackson Walker is represented by Jason L. Boland, William R. Greendyke, Julie Harrison, Maria Mokrzycka, Paul Trahan and Emily D. Wolf of Norton Rose Fulbright and Rusty Hardin, Leah M. Graham, Jennifer Brevorka and Emily Smith of Rusty Hardin & Associates.
The U.S. Trustee is represented by Vianey Garza, Alicia L. Barcomb, W. Joel Charboneau and Brian P. Thill of the U.S. Department of Justice.
The case number in the bankruptcy fee case is 23-00645.