The relationship was between a former bankruptcy judge and a partner at the firm
Houston-based bankruptcy judge Marvin Isgur has rescinded an ethics complaint he filed against US firm Jackson Walker for its failure to disclose a relationship between one of the firm’s ex-partners and a former bankruptcy judge, reported Reuters.
US District Judge Lee Rosenthal said in a three-page order published on Monday that as per court rules, judges cannot sanction law firms, only individuals.
“The basis for that limitation is that it is often unwarranted and unjust to sanction an entire firm for actions that are primarily, if not entirely, those of a few individuals within the firm.” Rosenthal wrote in a snippet published by Reuters.
In a September 2024 letter, Isgur had referred Jackson Walker for disciplinary proceedings over the firm’s supposed knowledge that former bankruptcy partner Elizabeth Freeman was in a low-profile relationship with ex-Houston bankruptcy judge David Jones. According to Isgur, Jackson Walker logged legal fees worth US$11 million in cases Jones served as judge or mediator.
Isgur said that the firm “did nothing to inform the court. I reject the concept that Jackson Walker had no duty to inform the court because Judge Jones, a judge on the court, obviously knew,” he wrote in a snippet published by Reuters.
Jones resigned as a judge in October 2023 after confessing that he was living with Freeman. Previously, he had presided over high-profile bankruptcies like those of JCPenney, Neiman Marcus, Party City and Chesapeake Energy.
Following Jones’ resignation, the US Justice Department bankruptcy watchdog, the US Trustee, has been pushing for Jackson Walker to cough up legal fees approved by Jones in at least 35 bankruptcy cases the firm initiated. Isgur recused himself from presiding over the disputes.
In August 2024, Jones claimed that he was being investigated criminally. He was also slapped with a sanction for providing testimony outside court supervision.
Rosenthal said that Jackson Walker was looking at heavy sanctions and explained in a statement published by Reuters that there was “no risk that Jackson Walker and some of its lawyers will escape scrutiny and potential punishment for the failure to disclose that led to this complaint in the first place.”
Jackson Walker released a statement published by Reuters saying that it had “acted responsibly and appropriately at all times under the circumstances.”
