More than a half-dozen trial lawyers have been contacted by parties involved in corporate bankruptcies and restructurings before U.S. Bankruptcy Judge David Jones of the Southern District of Texas 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 lawyer Elizabeth Freeman, who was an equity partner in Jackson Walker’s bankruptcy practice during the five years in which Jackson Walker represented dozens of clients in corporate restructuring cases in Judge Jones’ court.
But the lawyers say their investigations have just started.
“These are debtors, creditors and investors who wonder if their challenges to exit plans or their bids for assets or their objections to legal fees were fairly looked at by the court,” said Jeff Tillotson, a partner at Tillotson Johnson & Patton, who confirmed that he’s been contacted by potential clients. “One potential client question is whether he received a fair trial.”
“It is shocking that this happened. And I think the judge, the lawyer and the law firm could be on the hook,” he said.
Randy Johnston, a partner at Johnston Tobey Baruch and an expert in legal ethics and professional liability, said potential clients have asked his firm to get involved.
“This is incredibly shocking conduct,” Johnston said. “This is not even remotely a close call. It is common sense that you cannot sleep with the judge. Period. You either disclose the relationship or you recuse. No client would pick a lawyer or want to be up against a lawyer who has a partner who is sleeping with the judge.”
“It is so sad — sad for the judge, sad for the lawyer,” Johnston said. “Love makes us do stupid things. It reminds me of the Facebook relationship status — it is complicated.”
The controversy over the previously undisclosed relationship between Judge Jones and Freeman surfaced for the first time in an active court case last week in a bankruptcy case involving insurance-services provider GWG Holdings. U.S. Trustee Kevin Epstein asked Houston Bankruptcy 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 Freeman worked on the case and was appointed as the trustee for the “Wind Down Trust.”
None of the parties, according to documents filed by the U.S. trustee, disclosed the relationship between Judge Jones and Freeman.
“Judge Jones approved substantial legal fees payable to Jackson Walker that in some cases included fees attributable to Ms. Freeman,” Epstein said in court documents.
Epstein pointed to the complaint filed Oct. 13 by Chief Judge Priscilla Richman of the U.S. Court of Appeals for the Fifth Circuit, which announced the court is investigating alleged unethical conduct by Judge Jones related to the undisclosed relationship with Freeman.
Judge Jones, who has been one of the most highly respected bankruptcy judges in the U.S. and who has handled more large, complex corporate bankruptcies during the past five years than any other judge in the U.S., resigned his position Oct. 15.
A spokesman for Jackson Walker said the firm consulted outside ethics counsel after learning about the romantic relationship in March 2021.
“From the time we first learned of this allegation Ms. Freeman was instructed not to work or bill on any cases before Judge Jones,” Jackson Walker spokesman Jim Wilkinson said. “We are confident that we acted responsibly.”
Lawyers familiar with the controversy say that Jackson Walker leaders “redid the firm’s compensation structure so that Liza did not benefit financially” from the matters in Judge Jones’ court. Freeman left Jackson Walker in December 2022 and started her own law firm.
But the trustee’s petition points out that all of the activity in the GWG Holdings case occurred in 2022 and 2023, well after Jackson Walker lawyers had knowledge of the relationship between Freeman and Judge Jones.
Jackson Walker filed its application to be co-counsel for GWG Holdings in May 2022 but “did not disclose the relationship between Mr. Freeman and Judge Jones,” according to Epstein’s petition.
Epstein points out that debtor’s counsel, which includes Jackson Walker, asked Judge Isgur to appoint Judge Jones as a mediator on Nov. 30, 2022.
“Although Ms. Freeman was a partner at Jackson Walker at the time and later a shareholder and partner in The Law Office of Liz Freeman, there was no disclosure to this court of the relationship between Ms. Freeman and Judge Jones,” the trustee wrote in his petition. “After approval of the request, Ms. Freeman participated in the mediation as an attorney for the debtors without any disclosure to the other mediation parties or their counsel. The mediated settlement resulted in the plan that was confirmed by this court. The plan provides for the creation of two trusts, the Wind Down Trust and the Litigation Trust.”
Freeman was appointed to be the trustee of the Wind Down Trust.
“The [Fifth Circuit] complaint states that there is a ‘reasonable probability’ that Ms. Freeman substantially benefitted or had an interest in the substantial fees Judge Jones approved,” the trustee wrote in the petition to Judge Isgur. “The allegations in the complaint raise issues about the propriety of the mediation before Judge Jones in this case and thus about the propriety of the fees requested by or awarded to Jackson Walker in this case and fees requested or awarded for Ms. Freeman’s work after departing Jackson Walker and establishing her own practice.”
Judge Isgur granted the motion to delay approving the legal fees for Jackson Walker and Freeman.
Freeman participated in a court proceeding Friday in the GWG Holdings case before Judge Isgur, but there was no mention of Judge Jones or the fees regarding Jackson Walker.
In an interview with The Texas Lawbook, Judge Jones said Freeman never appeared before him during the five years she was with Jackson Walker, and they never shared any money nor did they ever discuss work at home.
“I know the rules, and Liz and I made sure that we never shared any money,” Judge Jones said. “If I had put it out there, people might have wanted to hire Jackson Walker because Judge Jones’ girlfriend worked there.”
The court transferred all of Judge Jones’ cases to his colleagues. Lawyers close to Judge Jones say that he is heartbroken over the controversy and that he feels isolated because neither Judge Isgur, who is his best friend and mentor, nor Bankruptcy Judge Christopher Lopez have spoken to Judge Jones during the past two weeks. Judge Jones’ resignation is effective Nov. 15.
Seven law firms confirmed to The Lawbook that they have been contacted by potential clients involved in bankruptcy matters involving Judge Jones, Freeman and Jackson Walker in recent years.
Johnston and Tillotson say they have not decided whether they will accept clients with potential cases.
Judge Jones is likely to claim sovereign immunity as a federal officer of the court, legal experts said.
John Zavitsanos, a founding partner at Ahmad, Zavitsanos & Mensing, said his firm has been contacted by potential clients, while adding that the controversy could end up being an ethical lapse without any actual causes of action.
“The problem with bringing a lawsuit is that I don’t know anybody who has ever said that Judge Jones did anything irrational or played any favors,” Zavitsanos told The Lawbook. “There is maybe more information to come out, but so far, I’m not seeing or hearing any clients or lawyers who say that the judge treated them unfairly and there is almost no one who is critical of the judge.”
“The whole situation is tragic and it is a huge loss for the legal community here in Houston,” he said.