There is still more fallout from the ethical lapse that allowed the once-secret relationship between former judge David R. Jones and attorney Elizabeth Freeman to go unreported for years. As a quick recap, the (now former) federal bankruptcy judge was romantically linked with the (now former) bankruptcy partner of a major law firm — Jackson Walker — and continued to hear cases involving that partner/law firm.
In the wake of the scandal, a fee dispute involving Jackson Walker emerged. The Justice Department’s bankruptcy monitor, the U.S. Trustee, is seeking to claw back $18 million in fees paid to Jackson Walker in 33 cases handled by Jones while he and Freeman were in a relationship. Now Bloomberg Law reports on text messages between Freeman and her colleagues that show how the dynamic between the bankruptcy judge and bankruptcy attorney played out.
Days before Jackson Walker filed the JCPenney Chapter 11 case, Freeman texted a colleague, “Talked to Jones. He’s got us.” And that seemingly cued legal machinations to ensure JCPenney’s case was heard by Jones.
On May 12, 2020, three days before department store retailer JCPenney filed for bankruptcy, Freeman texted her colleague Veronica Polnick and told her the company planned to file its Chapter 11 case in Corpus Christi, Texas, according to texts displayed in records viewed by Bloomberg Law. Jackson Walker was serving as local counsel to JCPenney’s lead bankruptcy lawyers at Kirkland & Ellis LLP.
Corpus Christi is one of seven court locations within the Southern District of Texas bankruptcy court district. Under the local rules, a filing in that location would guarantee that Jones would be assigned the case if it wasn’t immediately designated as “complex”—and JCPenney’s wasn’t.
Freeman told Polnick on May 12 that there were “too many fights” in the JCPenney case and that the company couldn’t afford a “process hawk,” referring to Jones’ judicial colleague and friend, Judge Marvin Isgur.
Isgur would instead get the bankruptcy of Ultra Petroleum Corp., Freeman told Polnick. Ultra, which was also represented by Kirkland and Jackson Walker, filed for Chapter 11 on May 14, the day before JCPenney. Ultra’s case ended up being assigned to Isgur, just as Freeman said.
“They know Jones will cut through the bullshit,” Freeman told Polnick about the JCPenney case. “Not so much a case of dodging Isgur.”
The exchange between Freeman and Polnick continued, with Freeman saying, “Jones has been softening up for this for a month.” And, “We are keeping this down loooooooowww.”
In the JCPenney bankruptcy, Jones approved ~$1 million in legal fees for Jackson Walker. Of that, ~$286,000 came from Freeman’s fees. The fees in the JCPenney bankruptcy are among those disputed by the U.S. Trustee.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @[email protected].