Bankruptcy Judge Romance Probe Goes Too Far, Jackson Walker Says

A Texas law firm tied up in litigation related to the clandestine relationship between its onetime partner and a prominent bankruptcy judge is pushing back against questioning from the Justice Department.

Jackson Walker LLP is battling accusations from the Justice Department’s bankruptcy monitor, the US Trustee’s office, that it helped keep the romance under wraps for its own benefit. But the efforts to connect the firm with the “alleged secret affair” between former partner Elizabeth Freeman and former Houston bankruptcy judge David R. Jones are flawed, Jackson Walker said in court filings Monday.

“The U.S. Trustee’s motivating thesis has never changed: somehow, someway, this is JW’s fault,” Jackson Walker said.

The filing is part of the expanding tangle of litigation related to Jones, who resigned as a Houston bankruptcy judge last year after admitting to a relationship with Freeman. She left Jackson Walker at the end of 2022.

Jones, once a top judge in the country for large Chapter 11 cases, approved fees for Texas law firm Jackson Walker LLP without disclosing he was in a longstanding, live-in relationship with Freeman. The US Trustee is now attempting to disgorge at least $13 million in fees, in the form of a sanctions, that Jackson Walker earned in 33 bankruptcy cases tied to Jones and Freeman.

On Monday, Jackson Walker said the US Trustee hasn’t put forth a “cohesive legal theory” or enough facts to connect the relationship of Freeman and Jones to the value of the firm’s work or its role in several bankruptcy cases Jones oversaw.

The firm also reiterated its position that it took reasonable steps to address the relationship when it learned of it.

Freeman had insisted in 2021 that her relationship with Jones was over, the firm has said. But Jackson Walker says it found out in 2022 that Jones and Freeman were still in a romantic relationship.

“Ms. Freeman’s decision to conceal her relationship when she joined the firm is not a license to punish JW,” the firm said.

‘Fishing Expedition’

Jackson Walker criticized the US Trustee for embarking on a “a wide ranging fishing expedition in discovery in an attempt to find a needle in a haystack.”

That includes questions from US Trustee attorneys in several depositions about a photo of a man water-skiing in an elf suit who the office thinks may be Jones, according to the Monday filing.

Freeman and her ex-husband have said the man in the elf suit is Freeman’s brother, the firm said. It’s not clear from the Jackson Walker filing what the photo may have to do with the government’s investigation into the firm’s ties to the relationship.

Jackson Walker also said reports of a criminal investigation into the scandal less than two weeks before Freeman and Jones were scheduled to be deposed has prevented Freeman and perhaps others from providing sworn testimony that could support Jackson Walker’s arguments, the firm said.

Jones’ former judicial colleague, Chief Judge Eduardo V. Rodriguez of the Southern District of Texas bankruptcy court, is also considering the scope of questions the US Trustee and Jackson Walker can ask Jones and his former case manager to see if they tread too deeply into judicial activities.

Tom Kirkendall, Freeman’s attorney in the fee matters, declined comment. Attorneys for Jackson Walker and Jones didn’t immediately respond to requests for comment.

A Justice Department spokesman declined to comment.

Jones is represented by in the fee matters by Quinn Emanuel Urquhart & Sullivan LLP.

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

Elizabeth Freeman is represented in the fee matters by The Law Office of Tom Kirkendall.

The case is HONX, Inc. and Official Committee of Unsecured Creditors of HONX, Bankr. S.D. Tex., No. 22-bk-90035, sur-reply 8/12/24.