Jackson Walker Rejected Judge Romance Ethics Advice, Report Says

Jackson Walker LLP rebuffed advice from its own outside ethics expert to disclose a relationship between a partner and a bankruptcy judge, instead opting for a confidentiality agreement barring discussions of the romance, according to a government-commissioned report.

The Texas law firm failed to uphold disclosure obligations under bankruptcy law, an expert report filed in Thursday in the US Bankruptcy Court for the Southern District of Texas found. The firm exhibited a “persistent pattern of ignoring, obfuscating and concealing” a relationship between its former partner, Elizabeth Freeman, and former Houston bankruptcy Judge David R. Jones, according to the report.

“Unfortunately, at every important moment in this matter, JW chose not to disclose but instead to conceal what it knew or had good reason to know about the Relationship,” wrote the report’s author, Temple University law professor Jonathan Lipson.

Jackson Walker and the Justice Department’s bankruptcy watchdog, the US Trustee, each moved to strike the other’s expert reports from being used in litigation. The reports were filed in a lawsuit where the US Trustee’s office has said Jackson Walker breached its ethical duties, a charge the firm rejects.

The firm regularly represented clients in cases Jones oversaw. A trial set for April will decide whether as much as $23 million in fees awarded to Jackson Walker should be vacated and whether the firm can be sanctioned.

Jones resigned soon after the relationship became public in late 2023 but litigation over the scandal remains pending. Freeman left Jackson Walker in December 2022.

Once the firm learned of an ongoing relationship between Jones and Freeman, by at least February 2022, it had a duty to amend its bankruptcy disclosures in cases where it implied or said there were no such connections, Lipson concluded.

Instead of disclosing or withdrawing from cases, Jackson Walker “decided to further bury evidence” of the relationship through a confidential withdrawal agreement between the firm and Freeman in November 2022, Lipson said.

Jones’ own “erroneous interpretation of his ethical obligations,” is separate from Jackson Walker’s duty to investigate allegations of an ethical conflict, disclose connections, or withdraw from those cases, Lipson said.

Conflicts and Confidentiality

Lipson cited expert opinions Jackson Walker received from Holland & Knight LLP attorneys in 2021 who were tapped by the Texas firm to provide ethics opinions about the relationship.

The Holland & Knight team advised Jackson Walker in June 2022 that the conflict should be reported or it should withdraw from cases before Jones, Lipson’s report said. Jackson Walker did neither, he said.

The firm didn’t tell its co-counsel, Kirkland & Ellis LLP, and didn’t ask if clients consented either, he said. No amendments were made to the firm’s bankruptcy disclosures, Lipson said.

Lipson also said said Freeman’s connections can be imputed to Jackson Walker under Texas rules.

Under the 2022 agreement, Freeman withdrew as an equity partner. The arrangement dictated that she and the firm could continue to work together in matters that didn’t involve Jones and “realize future opportunities,” Lipson’s report said.

Jackson Walker and Freeman also agreed under the deal that all of their discussions regarding her relationship with Jones “are confidential and shall not be disclosed or revealed to any third party,” which appears to include clients, Lipson wrote. There were several exceptions, including that it could be revealed as “required by law,” Lipson said.

Rebuttal

Jackson Walker’s rebuttal report commissioned from Renee Knake Jefferson, the chair of legal ethics at the University of Houston Law Center, noted that the 2022 agreement didn’t require confidentiality regarding the relationship itself, just the firm’s internal discussions related to it.

She argued that Lipson isn’t an expert on legal ethics, professional responsibility generally, or on Texas disciplinary rules. She said she had no opinion on Jackson Walker’s duty to disclose or supplement disclosures under the federal bankruptcy rules.

Jackson Walker requested conflicts disclosures at the time of Freeman’s hiring, acted quickly when new information came to light, consulted with ethics experts, and implemented safeguards on her involvement in cases with Jones, Jefferson said.

She also said Jackson Walker didn’t ignore Holland & Knight’s ethical advice, noting that its opinion letter said that either the relationship must be disclosed or that Freeman must leave the firm.

Jackson Walker acted reasonably in addressing the information it received about the relationship as it became aware of it, Jefferson said. She stressed that the firm’s actions shouldn’t be judged based on hindsight and that Freeman disclosed key details to the firm over time and “after years of deception.”

Texas disciplinary rules apply mostly to individual lawyers, not law firms as entities, Jefferson said. The rules don’t create a standard for civil liability, or a private cause of action, she said.

Jefferson also pushed back on Lipson’s arguments that conflict rules should apply “retroactively.” Texas disciplinary rules don’t require disclosing the relationship or doing an independent investigation, and don’t say the firm couldn’t have continued to recommend Freeman, she said.

A Jackson Walker spokesman declined to comment. Freeman’s lawyer, Tom Kirkendall, also declined to comment.

Jackson Walker is represented by Rusty Hardin & Associates LLP and Norton Rose Fulbright US LLP. Jones is represented by Quinn Emanuel Urquhart & Sullivan LLP.

The case is Professional Fee Matters Concerning the Jackson Walker Law Firm, Bankr. S.D. Tex., No. 23-00645, motions 1/30/25.