Jackson Walker’s Fee Fights Removed From Bankruptcy Court (2)

A federal judge has removed from bankruptcy court a slew of disputes over whether Texas law firm Jackson Walker LLP must return millions in fees for failing to disclose an onetime partner’s romance with a prominent judge.

The cases, which are related to the once-secret relationship between former judge David R. Jones and attorney Elizabeth Freeman, should be transferred in the interest of uniformity, economy, and expediency, Judge Alia Moses of the US District Court for the Western District of Texas said in an order issued Wednesday.

The ruling is a notable development in the fight between the Justice Department’s bankruptcy unit and Jackson Walker and hands a win to the government, which first requested the removal from bankruptcy court in late 2023.

Moses said she’ll hold a status conference to discuss how the matter will move forward and which issues should be handled by her or by the bankruptcy courts.

It’s not immediately clear whether Moses’ order will impact an upcoming trial over the fees in front of Chief Judge Eduardo Rodriguez of the US Bankruptcy Court for the Southern District of Texas that’s set to begin on May 12 in Houston.

Jones, who has been subpoenaed to testify at the trial, argued in a notice Wednesday that his testimony “is unnecessary and overly burdensome given the circumstances.” He noted that he already sat for a deposition.

Moses said in her order that the appearance of potential bias is also cause to change judicial assignment processes. However, there’s no reason to suggest that the bankruptcy judges who have overseen the proceedings so far have done so “other than ably and honorably, to the highest standard of judicial professionalism,” she said.

“This Memorandum Order and Opinion should not be read to cast doubt on their service or on any order or decision they have made in these proceedings to date,” Moses wrote.

“This unique case nevertheless requires stiff measures,” she said. “The need to reestablish public trust and confidence in the court system alone impels withdrawal in this highly unusual case.”

The US Trustee—the Justice Department’s bankruptcy monitor—is pushing to vacate orders approving up to $23 million it earned in more than 30 large bankruptcy cases. Its effort began after the revelation in 2023 of an undisclosed romantic and financial relationship between Jones and Freeman.

The US Trustee recently criticized the fragmented approach to adjudicating the proceedings among multiple bankruptcy judges, saying it’s costly and inefficient.

Moses’ ruling also rejects a recommendation Rodriguez made in December 2023 to keep the proceedings in bankruptcy court. Rodriguez said moving the disputes would hinder judicial efficiency.

Wednesday’s order withdraws from 34 Chapter 11 cases from bankruptcy court.

Moses has been critical of Jones in the past, saying he violated the code that requires judges to disqualify themselves in proceedings where their impartiality might reasonably be questioned. She said Jones flouted his statutory and ethical requirements “by presiding over dozens of cases from which he was obviously disqualified.”

Despite her terse words for the former judge, Moses has largely steered away from issuing rulings against Jones.

During a March court hearing in a civil suit related to the scandal, Moses said she would “have to ask some questions that nobody else will.”

The order comes shortly after Jackson Walker agreed to pay at least $1.4 million as part of several settlements with representatives of bankrupt businesses that appeared before Jones while Freeman worked at the firm. A federal criminal investigation has also been opened into issues surrounding the relationship.

A Justice Department spokesman declined to comment. A Jackson Walker spokesman declined to comment on Thursday.

The case is In Re: Professional Fee Matters Concerning the Jackson Walker Law Firm, S.D. Tex., No. 23-04787, order 4/9/25.