The multimillion-dollar dispute between Jackson Walker and the U.S. Trustee over legal fees paid to the law firm involved in the Houston bankruptcy court romance scandal looks like it is heading to trial.
Lawyers for Jackson Walker informed federal court officials Tuesday that efforts to resolve the litigation through mediation had failed.
Chief U.S. District Judge Alia Moses of the Western District of Texas ordered the two parties to report to her by July 15 if an out-of-court settlement could be reached. If not, she said, she would set the case for trial.
“The Parties advise the court that mediation concluded without a resolution of the parties’ disputes,” Jackson Walker lawyers wrote in a joint notice filed with the U.S. Trustee late Tuesday.
The two-page court document states that Jackson Walker agreed to pay $68,000 to cover the cost of the mediation.
The U.S. Trustee, often referred to as the federal watchdog of the bankruptcy court, has filed claims against Jackson Walker to claw back several millions of dollars in legal fees paid to the Dallas-based firm when its lawyers were representing debtors in more than 30 large Chapter 11 corporate restructurings that involved then U.S. Bankruptcy Judge David Jones.
In 2023, Jones admitted that he was in a secret romantic relationship for several years with bankruptcy lawyer Elizabeth Freeman, who had been a partner at Jackson Walker, while many of those cases were being decided. The U.S. Trustee has accused the firm and Freeman of misconduct for not disclosing the relationship to the court and to the parties involved.
Jackson Walker is represented in the litigation by Jason Boland, William Greendyke, Julie Goodrich Harrison and Maria Mokrzycka of Norton Rose Fulbright and Rusty Hardin, Leah Graham and Emily Smith of Rusty Hardin & Associates.
The U.S. Trustee is represented by Millie Aponte Sall, Vianey Garza and Alicia Barcomb.
The case is In re: Professional Fee Matters Concerning the Jackson Walker Law Firm, SDTX, Case No. 4:23-cv-4787-AM.