Jackson Walker violated lawyer disciplinary and federal bankruptcy disclosure rules when it failed to disclose the romantic relationship between one of its lawyers and the judge in several high-profile bankruptcies, and the firm should be sanctioned and required to return more than $11 million it was paid in those cases, according to the U.S. trustee for the Southern District of Texas.
Jackson Walker: Lawyer Misled Firm Over Relationship With Bankruptcy Judge
When Jackson Walker leaders confronted its partner, Elizabeth Freeman, in 2021 and 2022 about reports that she was in a romantic relationship with then Chief Bankruptcy Judge David Jones, Freeman assured them that “there was no ongoing intimate relationship with Judge Jones,” according to a court document filed Monday afternoon by lawyers for Jackson Walker.
“Jackson Walker did not know of any ongoing intimate relationship between Ms. Freeman and Judge Jones until 2022 when it learned, quite by accident, that Ms. Freeman’s denial was possibly false or at least no longer true,” the firm states in a five-page filing titled “Preliminary Response of Jackson Walker to Recent Filings by the Office of the United States Trustee.”
U.S. Trustee: At Least 26 Bankruptcy Cases Tainted Due to Judge Jones, Ex-Jackson Walker Partner Relationship
The U.S. Trustee filed notice Friday that at least 26 corporate bankruptcy cases in the Southern District of Texas are tainted and that $13 million in legal fees awarded to Jackson Walker should be revisited or declared invalid because of the undisclosed romantic relationship between Houston Bankruptcy Judge David Jones and former Jackson Walker law partner Elizabeth Freeman. The trustee also said the disputes should be transferred to the chief judge in the Western District.
The Texas Lawbook has an in-depth report.
‘Reminds Me of the Facebook Relationship Status — It’s Complicated’
Seven trial lawyers have been contacted by parties involved in corporate bankruptcies and restructurings before U.S. Bankruptcy Judge David Jones of Houston between 2018 and 2022 to inquire about potential legal claims they have against the judge or the law firm that employed his live-in girlfriend during those five years. No new lawsuits have been lodged and no one is publicly claiming that they were wronged as a result of Judge Jones’ secret romantic relationship with a partner in Jackson Walker’s bankruptcy practice.
But the controversy surfaced last week in an ongoing bankruptcy case. U.S. Trustee Kevin Epstein asked Judge Marvin Isgur, who is overseeing the GWG Holdings restructuring, to postpone awarding more than $1 million in legal fees to Jackson Walker, who served as co-lead debtor’s counsel, while the U.S. trustee’s office investigates. Judge Jones served as the mediator in the case and the lawyer worked on the case.
Fallout in SDTX Bankruptcy Court
Have large corporations filed their Chapter 11 restructurings in Houston because the rules are favorable to debtors or because of Bankruptcy Judge David Jones’ expertise? Several bankruptcy lawyers fear it was the latter that made the Southern District of Texas the busiest jurisdiction over the past six years for complex business restructurings.
With Judge Jones’ resignation over the weekend amid a Fifth Circuit investigation, experts say that there is a danger of returning to the days when Texas lost billion-dollar restructurings to other jurisdictions.
Highly Respected Houston Bankruptcy Judge David Jones Resigns Amid Investigation
U.S. Bankruptcy Judge David Jones, one of the most prominent and busiest bankruptcy judges in the U.S., is expected to resign his position Monday over allegations of an undisclosed relationship with a former Jackson Walker bankruptcy lawyer who never appeared before him in a case, according to sources at the U.S. Court of Appeals for the Fifth Circuit and the U.S. District Court for the Southern District of Texas.
SCOTUS to Take Up Non-Consensual Third-Party Releases in Bankruptcy
The U.S. Supreme Court recently entered a short order that may later be seen as one of the final steps toward definitively addressing a bankruptcy issue that has bedeviled both lawyers and courts for decades.
AI Chatbots Are Useless for Bankruptcy Lawyering
Although the developers label these apps as “experimental,” some commentators suggest that AI be put to work now in the real world of business and commerce. Some even contend that AI applications can do the job of lawyers, implicitly jeopardizing law practice as a career. Is it true?