Texas law firm Jackson Walker LLP is scheduled to face off in a December trial against a Justice Department watchdog over an undisclosed romantic relationship between a former attorney and one of the nation’s former top bankruptcy judges.
Houston Judge Eduardo V. Rodriguez at a hearing Tuesday rejected requests by Jackson Walker and the US Trustee’s office to set trial deadlines aside after the parties filed a major settlement term sheet Aug. 2 which would have the law firm pay $15 million to end the government litigation.
The deal, so far, is only a term sheet and the parties aren’t “there yet,” Rodriguez said during the hearing held in the US Bankruptcy Court for the Southern District of Texas.
“I’m going to set a trial,” Rodriguez said. “And that’s the end of it.”
Jason L. Boland of Norton Rose Fulbright US LLP, representing Jackson Walker, told Rodriguez the firm is optimistic about coming to a full settlement but said it needed several months to do so.
The settlement, which requires court approval, would end long-running litigation brought by the US Trustee’s office accusing Jackson Walker of breaching its ethical duties by failing to disclose the romance its onetime bankruptcy partner Elizabeth Freeman had with ex-judge David R. Jones.
The US Trustee had been aiming to disgorge up to $23 million in fees Jackson Walker collected in cases involving Jones while it employed Freeman. The firm said it could have done things differently, and has acknowledged it didn’t disclose the relationship in its employment applications or in later disclosures in the affected cases, but it isn’t admitting wrongdoing as part of the agreement.
Along with paying $15 million, Jackson Walker has agreed to implement several conflicts screening and disclosure reforms, and the US Trustee’s office would also file a report detailing the facts of its investigation.
A trial would decide the merits of the US Trustee’s push to vacate Jackson Walker’s retention in several cases. Millie Sall, assistant US trustee for the regional Texas office, said Tuesday that having to prepare for trial would distract from efforts to finalize the settlement.
Jones’ and Freeman’s romantic involvement — and co-ownership of a house — remained under wraps until October 2023, when an anonymous letter alleging the romance was influencing the judge’s rulings became public. Jones, once the most popular judge in the country for large Chapter 11 cases, announced his resignation shortly thereafter.
The US Trustee’s office would be able to pursue further relief if it’s later discovered there’s a “material omission of fact” over what Jackson Walker’s management committee members knew about the relationship, according to the term sheet.
The US Trustee brought the litigation in November 2023 to vacate orders approving Jackson Walker’s retention fees and applications in at least 33 large bankruptcy cases connected to Jones and Freeman. Extensive discovery showed that at least two Jackson Walker attorneys exchanged text messages in 2021 indicating they knew about, and discussed the potential fallout of, the undisclosed romance.
Rodriguez has also recommended the approval of nine private settlements which return nearly $4.8 million to several bankruptcy estates.
Jackson Walker is additionally represented by Rusty Hardin & Associates LLP.
The case is In re Pro. Fee Matters Concerning the Jackson Walker Law Firm, Bankr. S.D. Tex., No. 23-04787, hearing 8/4/26.