Jackson Walker ‘Defiled the Very Temple of Justice,’ Judge Says

Jackson Walker LLP breached its ethical duties to clients by failing to disclose a once-secret relationship between an attorney and a prominent Houston bankruptcy judge, a federal judge has found.

In a scathing letter recommending discipline for the Texas law firm, Judge Marvin Isgur on Sept. 20 said Jackson Walker protected itself in violation of its professional responsibilities by concealing that Elizabeth Freeman, who was a bankruptcy partner with the firm until late 2022, was in a relationship with ex-judge David R. Jones.

“It appears that Jackson Walker breached its own ethical duties after it learned of the relationship,” Isgur wrote. “Breaches by the firm itself defiled ‘the very temple of justice.’”

Isgur’s recusal the same day was an unexpected shakeup in the complicated litigation surrounding Jackson Walker, Freeman, and Jones, who resigned as a Houston bankruptcy judge last year after admitting to the romance. Isgur, a onetime mentor to Jones, in the past referred to the former judge as his “stubborn adopted son,” and has faced questions over his continued handling of the fee issues.

Isgur sent the letter recommending discipline to Chief Judge Randy Crane of the US District Court for the Southern District of Texas. Isgur then recused himself from disputes where the Justice Department’s bankruptcy monitor, the US Trustee, is trying to claw back as much as $18 million in fees from the firm across 33 bankruptcy cases.

The US Trustee has said Jackson Walker earned the fees in bankruptcy cases involving Jones while he was secretly dating Freeman.

Crane has referred the disciplinary action to Judge Lee H. Rosenthal for the US District Court for the Southern District of Texas. The action is one of several tied to scandal, including a federal criminal probe.

Under the disciplinary rule cited by Isgur, a public hearing would be held and Jackson Walker would have a chance to respond to the charges prosecuted by an attorney appointed by the judge. If Rosenthal upholds the allegations, he could order permanent disbarment, a suspension, or a written or oral reprimand.

A Jackson Walker spokesman didn’t immediately respond to a request for comment.

‘Intolerable’

Jackson Walker has said Freeman lied to the firm about the full extent of her relationship with Jones. The firm maintains that it didn’t violate any ethical rules or disclosure obligations.

The firm has said Freeman insisted in 2021 that her relationship with Jones was over, but that it learned in February 2022 that they were still seeing each other.

Isgur on Sept. 20 said Jackson Walker couldn’t have ethically decided that the facts it knew should be hidden from its clients. The failure to disclose wasn’t just a decision of one lawyer or a practice group, but the whole firm, Isgur said.

He called it “inconceivable” that Jackson Walker didn’t tell its clients of the situation.

“I have concluded that Jackson Walker’s deliberate failure to inform its clients was an ethical breach that we cannot excuse,” Isgur said.

Isgur noted that when Freeman’s attorney suggested Jackson Walker disclose the relationship, the firm still didn’t tell the court. The firm’s silence may have violated Texas disciplinary rules that require attorneys to assist judges from violating their own duties, Isgur said.

“It is intolerable that Jackson Walker protected the Jackson Walker firm to the exclusion of its inherent professional responsibilities,” Isgur said.

Jackson Walker’s actions also affected opposing parties as well, Isgur said. Nonetheless, he said, “caution” is needed as some creditors of companies that went through Chapter 11 in the Houston bankruptcy court may now be able to bring actions against Jackson Walker. Only a handful have taken this step so far.

Creditors may be barred in some cases from taking action when Chapter 11 plans have been confirmed, Isgur said.

Isgur had earlier in the week scheduled a trial in fee cases against Jackson Walker. It isn’t clear what prompted him to send the letter.

Isgur said he recused because he couldn’t ethically hear cases involving Jackson Walker after making the disciplinary referral. He didn’t immediately respond to a request for comment.

The case is In re: Jackson Walker LLP, S.D. Tex., No. 24-01523, Charge of Misconduct 9/20/24.