Houston Bankruptcy Judge Recuses From Jackson Walker Fee Scandal

Judge Marvin Isgur recused himself from a fee dispute involving Jackson Walker LLP after referring the Texas law firm for disciplinary action for failing to disclose a relationship between an attorney and another bankruptcy judge, who was Isgur’s close friend.

Isgur’s Friday recusal relates to a dispute pitting Jackson Walker against the Justice Department’s bankruptcy monitor, the US Trustee. The US Trustee is trying to claw back millions of dollars in fees the firm earned in cases handled by former bankruptcy judge David R. Jones while he was secretly dating Elizabeth Freeman, who was a partner at Jackson Walker until late 2022.

The recusal is a significant and unexpected shakeup in the complicated litigation related to Jackson Walker, Freeman, and Jones, who resigned as a Houston bankruptcy judge last year after admitting to the romance.

“It would be inappropriate for me to refer a matter for disciplinary action, and then to grant or deny relief in a bankruptcy case based on findings and conclusions concerning the same situation that was referred,” Isgur wrote.

Isgur, who served with Jones in private practice and later on the bench, had previously called the ex-judge his “adopted son,” which raised questions over whether he should recuse himself from cases involving the fee dispute.

Isgur referred the Jackson Walker disciplinary action to Chief Judge Randy Crane of the US District Court for the Southern District of Texas.

The US Trustee is trying to disgorge fees from Jackson Walker in cases where the firm failed to disclose the relationship. The firm has maintained that it acted appropriately when it learned of the relationship.

Jones was once the most prolific judge in the country for large corporate bankruptcies before he resigned, handing some of the most high-profile Chapter 11s.

Isgur’s sudden recusal comes in the same week he scheduled a December trial for one of the fee cases he was handling, and in the same week Jones appeared in the Houston courthouse for a deposition monitored by fellow bankruptcy Judge Eduardo Rodriguez.

Rodriguez in December 2023 ruled that Isgur didn’t have to recuse himself from the bankruptcy proceedings for hand sanitizer maker 4E Brands Northamerica LLC based on his past with Jones.

The US Trustee’s office has identified Isgur, Rodriguez, and a third Houston bankruptcy judge, Christopher Lopez, as possible witnesses in its civil probe.

The case is Altera Infrastructure Project Services LLC, Bankr. S.D. Tex., No. 22-90129, recusal 9/20/24.