Bankruptcy Judge’s Exit Raises Questions About Policing Ethics

A high-profile Texas bankruptcy judge’s resignation reveals the limited power—and will—of existing judicial oversight systems to take steps that would prevent future ethical misconduct.

Judge David R. Jones of the US Bankruptcy Court for the Southern District of Texas has, for now, calmed the maelstrom of controversy by announcing his decision to leave the bench. He announced his resignation, which will go into effect on Nov. 15, following revelations that he failed to disclose his long-term relationship with a local attorney at a firm that regularly appeared in his cases.

But with an appeals court seemingly dropping an investigation into the matter, it’s unclear who could pick up the mantle, even as some call for reforms to preclude this situation in the future.

The Judicial Conference of the US, the State Bar of Texas, and the Department of Justice’s bankruptcy watchdog all have potential, but limited, roles to play.

“I sure hope these questions don’t die on the vine,” said Nancy B. Rapoport, a bankruptcy law professor at the University of Nevada, Las Vegas.

Limited Options

The US Court of Appeals for the Fifth Circuit last week issued a formal misconduct complaint against Jones after learning about his relationship with Elizabeth Freeman of the top Texas bankruptcy firm, Jackson Walker LLP.

Under a Fifth Circuit investigation, a special committee would be appointed to investigate further and produce a report, which would be considered by the circuit judicial council to determine how to proceed.

Gabe Roth, executive director of advocacy group Fix the Court, argued that the rules governing judicial misconduct proceedings are clear: a judicial council has “ample authority to assess potential institutional issues related to the complaint” as part of its administrative responsibilities and ethical leadership.

“I would hope that Judge Jones’ resignation is not the end of the story, meaning the Fifth Circuit should examine a raft of procedures, starting with how it handles conflict checks, that permitted the open secret of the relationship and its clear ethical implications to persist,” Roth said.

Jones defended his decision not to disclose the relationship to The Wall Street Journal, noting that he and Freeman aren’t married and there was no financial benefit to him from her legal work.

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But the Code of Conduct for US judges requires Jones to recuse himself from any matter if Freeman had worked on it, whether or not she personally appeared in his courtroom or on the papers submitted to the court, said Stephen Gillers, an New York University School of Law professor who studies legal and judicial ethics.

“I can say that Jones was wrong to believe that so long as his and Freeman’s assets were separate, and he did not benefit from her income, there was no problem,” Gillers said.

Yet Jones’ resignation eliminates the possibility of judicial discipline, and bar authorities lack jurisdiction to sanction Jones for his conduct as a judge, Gillers said. He’s also immune to civil liability for his judicial decisions, he said. Jones’ resignation has eliminated the most severe consequence of a Fifth Circuit probe: his removal from the position.

“Some have argued that a resignation should not prevent judicial discipline and that former judges, although they can no longer be removed from the bench, should be subject to discipline and loss of a pension for serious misconduct while a judge,” Gillers said. “But that’s not the rule in the federal system.”

Vikram Chandhok, the Fifth Circuit’s chief mediator, said he can’t comment on the specifics of Jones’ situation, but that the chief judge can conclude a complaint if the allegations are rendered moot and that former judges can’t be subject to remedial action.

Jim Wilkinson, a Jackson Walker spokesman, pointed to a previous statement the firm made saying it conducted a full inquiry and consulted independent outside ethics counsel once it learned of the issue in March 2021. Freeman joined Jackson Walker in 2018 and left in late 2022 to start her own firm.

The Bar’s Role

Allegations of improper disclosures could be brought to the bar. But the State Bar of Texas is required by law to keep disciplinary information confidential unless it results in a public sanction, said Claire Reynolds, public affairs counsel for bar’s Office of the Chief Disciplinary Counsel.

The bar can’t confirm whether grievances have been filed against attorneys, she said.

Generally, when someone files a grievance against an attorney, the Texas bar has 30 days to decide whether to upgrade or dismiss it, Reynolds said. If it’s upgraded, the bar conducts a more thorough investigation to determine whether there’s just cause to proceed with litigation. That gives the attorney time to respond, and an investigatory hearing might be held, she said.

If the grievance proceeds, the bar would then file a petition in the venue of the accused attorney’s choice—either before a private evidentiary panel or in public district court.

Eventually, a trier of fact would decide whether the attorney committed professional misconduct and, if so, the appropriate punishment. Options include reprimand, suspension, or disbarment, depending on the facts of the case, Reynolds said.

“Depending on the circumstances, a grievance can be resolved in 30 days, or it can go for months—sometimes even years,” Reynolds said. “A lot of people mistakenly think that we can just disbar someone, but there is a whole statutory process that we have to follow.”

It isn’t clear if the bar has any power to look into a complaint of a judge acting in the capacity of a mediator, Reynolds said. Jones served as a mediator in a case that was flagged by the Fifth Circuit in its complaint.

“Someone would need to file a grievance and then our office would look to see whether it implicates any of the rules of professional conduct for attorneys,” Reynolds said. “So much of it depends on the facts.”

Though the bar could weigh in if a grievance was filed against Freeman, it likely wouldn’t become involved in Jones’ case because his conduct occurred while he was an acting judge, not an attorney. The Texas State Commission on Judicial Conduct said it doesn’t have jurisdiction over complaints against federal judges.

Additionally, the Judicial Conference of the United States, the national policymaking body for the federal courts, won’t have a continued role in looking into the issues. While someone could seek larger policy changes from the Judicial Conference, they would still likely occur at the local level.

The Administrative Office of the US Courts declined to comment on behalf of the Judicial Conference. Jones didn’t immediately respond to requests for comment. Tom Kirkendall, an attorney representing Freeman, had no comment.

The US Trustee

The US Department of Justice’s bankruptcy watchdog, the US Trustee’s office, has raised Jones’ and Freeman’s situation as a potential issue in a case in which she represented a key party in mediation that he presided over. But it’s unclear whether the office will take any further action in other cases, or what impact its complaint would have.

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A Justice Department spokesman declined to comment.

Chief US District Judge Randy Crane of the Southern District of Texas said this week the court is prepared to consider any requests from those involved in bankruptcies Jones oversaw to review his decisions. But he said he doesn’t believe there will be many requests.

Despite the ethical issues, Roth, from Fix the Court, said he understood the desire not to reopen every case overseen by Jones in which Freeman was involved.

“Considering the issues on a case-by-case basis, which Chief Judge Crane appears to be calling for, seems reasonable,” Roth said.

Clifford J. White, a former director of the US Trustee’s office who now works for bankruptcy compliance company AIS, noted that if there are facts or allegations suggesting criminal activity, such as lying, the US attorney’s office could investigate. But the odds are that any further action will come from those who raise issues in the courts, he said.

As far as broader policy reforms, the Texas courts should reconsider the special two-judge panel that Jones sat on, which took most of the large bankruptcies in that district, White said.

The panel, which Jones helped create and allowed him to take on many of the large, complex cases in the district, will make it harder to clean up and deal with the fallout of his resignation, White said. Courts should also reconsider whether judges should be mediating others’ cases—which bankruptcy judges often do for each other— and an expansion of law firm disclosures, he said.

Under the bankruptcy code, the office’s role “can be as large as it needs to be,” White said. But he suspected the US Trustee’s office will only raise concerns in instances where it has direct information.

“The US Trustee can play a role surgically,” White said. “But I don’t see it as going through every single case that’s been decided.”