Jackson Walker to Pay $15 Million in Bankruptcy Judge Scandal Settlement

Jackson Walker agreed to pay $15 million to settle a Justice Department case over an undisclosed romance between a partner and a bankruptcy judge, resolving claims the firm concealed the conflict in 33 cases.

"Jackson Walker acknowledges, while not admitting fault, that it could have approached this matter differently," the firm said in settlement papers filed Sunday in the Southern District of Texas.

The Office of the U.S. Trustee had sought to strip the firm of roughly $23 million in fees from cases overseen by former Chief U.S. Bankruptcy Judge David Jones, who resigned in October 2023 after confirming his relationship with Elizabeth Freeman, a Jackson Walker bankruptcy partner from 2018 to 2022.

The settlement, subject to approval by U.S. District Judge Alia Moses, marks the most significant legal consequence to emerge from the ethics scandal. A separate DOJ criminal investigation launched in 2024 remains ongoing, according to people familiar with the situation.

The Undisclosed Relationship

Freeman was a bankruptcy partner at Jackson Walker until December 2022. The firm said it was deceived by Freeman into believing her relationship with Jones had ended in March 2020. After being confronted by Jackson Walker two years later, Freeman admitted that she and Jones had rekindled their relationship, the firm said.

Jones, who became chief judge of the Houston bankruptcy court in 2015, put in place rules that steered all complex chapter 11 filings in the Southern District of Texas to one of two judges — himself or his longtime mentor Marvin Isgur. Law firm Kirkland & Ellis, the nation's leading adviser to financially troubled companies, soon began filing many of its major bankruptcy cases in Houston, followed by other leading firms. Kirkland partnered with Jackson Walker as co-counsel on nearly all such cases filed in Houston.

The surge of cases turned Jones and Isgur into two of the nation's busiest bankruptcy judges. Kirkland has said in civil litigation following Jones's resignation that no one at the firm knew of his relationship with Freeman until it became public.

Settlement Terms and Broader Fallout

As part of the civil agreement, Jackson Walker said it would comply with all applicable bankruptcy disclosure requirements and ethical obligations. The firm also agreed to implement changes to its conflicts screening and disclosure practices, and to fund an independent review of its bankruptcy disclosure procedures.

The settlement announcement came two days before the parties were scheduled to meet for a conference before Chief U.S. Bankruptcy Judge Eduardo Rodriguez. Rodriguez last month recommended court approval of nearly $5 million in separate, private settlements Jackson Walker reached with former bankruptcy clients whose cases were presided over by Jones.

A lawsuit by one of the clients alleged multiple Jackson Walker lawyers knew about the relationship between Jones and Freeman but kept it hidden, violating bankruptcy disclosure requirements and professional rules.

The U.S. Trustee, a civil watchdog that polices the nation's bankruptcy courts, alleged that Jackson Walker failed to disclose the romantic ties while falsely claiming in court papers that it was an unbiased, disinterested adviser to its clients. Jackson Walker has maintained it acted appropriately once it learned of the couple's relationship.

Attorneys for Freeman and Jones, who were not parties to the U.S. Trustee's disgorgement effort, did not respond to requests for comment.

The settlement shows the enforcement stakes for law firms operating in the bankruptcy bar, where disclosure requirements protect the integrity of court proceedings. If approved, the $15 million payment would represent the largest penalty tied to the Jones scandal, which reshaped how major chapter 11 cases are routed through the Houston bankruptcy court.

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