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Jackson Walker Law Firm Pays a Price in Jones-Gate:
What Took So Long?
By Cliff White[1]
On August 2nd, the United States Trustee Program (USTP) and the Jackson Walker (JW) law firm filed a Notice of Settlement and Term Sheet[2] resolving litigation commenced by the USTP in November 2023 in connection with the undisclosed romantic relationship between disgraced former Bankruptcy Judge David R. Jones and Jackson Walker partner Elizabeth Freeman. Ms. Freeman or her law firm were retained in 33 bankruptcy cases presided over or mediated by former Judge Jones during the relationship. The USTP asserted that the relationship created conflicts of interest and a duty to disclose in the employment applications.
The litigation was initially seen by many commentators as rather straight-forward. The USTP asked the court to vacate employment orders and disgorge or deny $23 million in fees requested by Jackson Walker for services in cases tainted by the undisclosed Jones-Freeman relationship. Instead, the litigation has had a number of twists and turns with protracted disputes and roadblocks too numerous to recount here.
Finally, almost three years later, we are on the cusp of resolution of the USTP’s litigation.[3] As described by the Wall Street Journal, “[i]f approved in court, the firm’s settlement would mark the most significant legal consequence to be issued around the ethics scandal that forced Jones off the bench.”
The settlement contains all of the typical elements that have characterized USTP settlements with major financial institutions and professionals who break the bankruptcy rules. Here is a summary with commentary on the major components of the deal as outlined in the Term Sheet:
Payments: JW will pay $15 million in connection with the 33 cases covered by the settlement. JW reached earlier settlements with some post-confirmation entities in smaller amounts. JW is effectively disgorging most of the fees it received or requested in cases tainted by the undisclosed relationship. Additional details on the payments will be provided in a Consent Order to be filed later.
Recitation of Facts: Transparency requires a full statement of JW’s conduct, even though JW does not admit that its conduct renders the law firm legally liable. In many past cases, the USTP has required a factual statement from the opposing party so there could be no doubt that the relief was justified. (This requirement grew out of a case in which, shortly after settlement with the USTP involving payment of tens of millions of dollars, a lawyer for a major financial institution publicly protested that the USTP had no evidence.)
In the instant cases, JW admits that “it could have approached this matter differently.” But the Term Sheet does not require that JW provide a more fulsome description of its conduct. That makes sense because there already has been extensive discovery and some of that made its way into public court filings. It is less critical that JW recite the facts over again. In addition, the Term Sheet provides that the USTP will file in court its own version of the facts of its investigation. It is not hard to imagine that the USTP recitation might be extensive, direct, and extremely embarrassing to JW.
Releases: As is typical, the parties make clear that the agreement does not affect any other federal investigations by criminal or civil authorities – nor does it affect the rights of third-parties (e.g., creditors who believe that JW denied them a fair hearing in court because of the law firm’s alleged conflict and non-disclosure). Jackson Walker is not off the hook yet.[4]
It is striking that USTP expressly reserves the right to seek additional relief if facts later emerge to show that JW’s management committee had actual knowledge of the Jones-Freeman relationship. The USTP investigation undoubtedly focused on management committee knowledge and the USTP seems to be taking no chances in the event that relevant facts were covered up.
Independent Review of JW Compliance: JW agreed to change its internal procedures on conflicts and disclosures to ensure future compliance with bankruptcy and ethical requirements. An independent reviewer will file on the court record a report on the changes and implementation. Presumably, that review will evaluate the adequacy of the new internal procedures.
The real question is what took Jackson Walker so long before settling? The only alternative was to take the existential risk of a reputation-damaging trial. Instead, the litigation played out in slow-motion at great expense to all parties and both the district and bankruptcy courts. Perhaps JW thought the USTP would wear down and run out of resources.
Upon court approval of the settlement, an important phase of what many have called the Jones-gate scandal will conclude. Even though other civil litigation may still percolate, we have reached a milestone. And now we await the results of the reported federal criminal investigation into matters related to Judge Jones’s conduct. The scope of the investigation is unknown. Even though the statute of limitations for most crimes extends to five years, white collar crimes are often prosecuted or investigations dropped within about three years after the alleged illegal conduct. We have now reached that time. Stay tuned.
Copyright 2026 Creditor Rights Coalition
The views of our Contributors reflect their own personal views and should not be attributed to their respective firms or the Creditor Rights Coalition.
[1] Cliff White was Director of the Justice Department’s bankruptcy “watchdog,” the United States Trustee Program, for 17 years until his retirement in 2022.
[2] In re Professional Fee Matters Concerning Jackson Walker Law Firm, Civ. Action No. 4:23-CV-4787-AM (S.D.Tex. filed Aug. 2, 2026), Document 301.
[3] According to the Notice, the Term Sheet will be incorporated into a Consent Order subject to notice, opportunity to object, and court approval. Bankruptcy Judge Eduardo Rodriguez set a trial date for January 19, 2027, in the unlikely event the final settlement is not approved by that date.
[4] In the Term Sheet, the USTP states that it has no objection to JW trying to resolve claims with third-parties. That may add some delay in presenting the court with a Consent Order settling the USTP actions. But JW also has an urgent interest in settling all litigation related to the Jone-gate scandal and achieving its own version of a “fresh start.”
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