Jackson Walker, US Trustee Ordered to Discuss Deal Language

A judge ordered Jackson Walker LLP and the Justice Department’s bankruptcy watchdog to try to come to an accord over private settlements related to an undisclosed romance between a former firm partner and a top bankruptcy judge.

Judge Eduardo V. Rodriguez on Tuesday told the Texas law firm and the US Trustee’s office to discuss whether they could agree on language that would allow settlements with bankruptcy estates to move forward without hampering the government’s ongoing push to claw back professional costs.

The US Trustee has accused Jackson Walker of breaching its ethical duties by failing to disclose the relationship while it represented clients before the former judge, David R. Jones.

The order came Tuesday evening amid a a full day of evidence at a trial in the US District Court for the Southern District of Texas. Rodriguez is overseeing three days of hearings to determine whether nine settlements worth about $4.48 million combined should be approved ahead of the US Trustee’s broader effort to unwind Jackson Walker’s employment orders and disgorge fees the firm collected in those bankruptcies.

The evidentiary trial is over whether the private settlements can legally limit the amount of money Jackson Walker might be forced to return to the estates in the US Trustee’s litigation and how the deal could impact the rest of the government’s case.

The trial is the first since Jones resigned from the Houston bankruptcy bench after his relationship with attorney Elizabeth Freeman was revealed in 2023. It pits the Justice Department’s bankruptcy watchdog against the firm, which has settled with some bankruptcy estate administrators to resolve allegations that it intentionally kept the relationship under wraps.

The US Trustee has alleged Jackson Walker concealed the romance between Freeman and Jones. It’s now looking to reverse more than $23 million in fees the firm earned in at least 34 cases involving Jones.

The firm has maintained that it acted appropriately.

Rodriguez will make recommendations to Chief Judge Alia Moses of the US District Court for the Western District of Texas, who will decide if or when to approve the settlements.

The court is considering each settlement individually. On Tuesday, it heard arguments and testimony related to several deals, including one with a successor to JCPenney. The debtors of the settling estates were all represented in bankruptcy at some point by Jackson Walker.

US Trustee attorneys said Tuesday that bankruptcy fees are a matter of public interest and can’t be resolved through private settlements that circumvent the court’s authority. The government watchdog proposed settlement language explicitly saying the deals don’t affect the US Trustee’s actions.

The US Trustee has also said language should be added stating that the estates aren’t barred from accepting additional funds if the court later orders Jackson Walker to return more money. The government additionally sought a provision saying no final fee orders can be allowed until its motions are fully resolved.

But Jackson Walker rejected that language, calling it an attempt to rewrite private contracts and substitute the government’s business judgment for that of the private parties.

Jackson Walker said it would agree to the government’s continued pursuit of relief if the firm can keep all of its claims, defenses, and objections. The firm also said it wants to maintain the right to introduce the deals as a mitigating factor or in future trials regarding sanctions or fee disgorgement.

The trial, which stretched well into the evening Tuesday, is set to continue Wednesday morning.

Jackson Walker is represented by Norton Rose Fulbright US LLP and Rusty Hardin & Associates LLP.

The case is In Re: Professional Fee Matters Concerning the Jackson Walker Law Firm, S.D. Tex., No. 23-04787, hearing 3/17/26.