In a major development highlighting the intersection of legal ethics and high-stakes bankruptcy proceedings, Houston-based law firm Jackson Walker LLP has agreed to pay $1.4 million to settle claims brought by Old Copper Company, the entity that took over JCPenney’s operations after its bankruptcy restructuring. The case stems from controversy surrounding fees the firm received during JCPenney’s bankruptcy, which were approved by U.S. Bankruptcy Judge David R. Jones — a judge later revealed to have had an undisclosed romantic relationship with a then-partner at Jackson Walker.
Background: Ethics Concerns Trigger Scrutiny
The roots of this case stretch back to 2023, when Judge Jones — one of the nation’s most prominent bankruptcy judges — admitted to sharing a home with Elizabeth Freeman, a partner at Jackson Walker during key bankruptcy proceedings. The disclosure immediately sparked questions about whether the judge’s approval of Jackson Walker’s multimillion-dollar fee requests in several major bankruptcy cases, including JCPenney’s, had been compromised.
Old Copper Company sued Jackson Walker earlier this year, alleging that the firm should have disclosed the relationship and that its failure to do so tainted the fee process. The lawsuit sought the return of all fees the firm collected under Judge Jones’s orders, a potentially significant financial hit for the Texas-based firm.
Details of the Settlement
The $1.4 million settlement represents a negotiated resolution between Jackson Walker and Old Copper after months of mediation, which began in June. The agreement will need court approval, with U.S. District Judge Alia Moses overseeing this case as well as several related claims involving other bankruptcy estates.
This settlement is not an isolated event. Jackson Walker has been working to resolve multiple similar disputes, entering into at least five other settlements with former clients whose bankruptcies were overseen by Judge Jones. In total, more than $3.7 million in settlements are pending across different cases.
Pushback from the U.S. Trustee
While the settlement is a significant step toward resolution, not all parties are satisfied. The U.S. Trustee’s Office, which monitors integrity in the bankruptcy system, has opposed some of the proposed settlements. The Trustee argues that allowing Jackson Walker to keep part of its fees does not go far enough in addressing the ethical breach and undermines the principle of full accountability.
Despite this opposition, some former clients — including Seadrill Partners — have urged the court to approve their settlements, arguing that they are fair, negotiated agreements and do not limit the Trustee from pursuing its own independent claims against Jackson Walker. This dispute underscores the delicate balance courts must strike between providing restitution and ensuring finality for the parties involved.
Fallout for Judge Jones and Legal Industry Implications
Judge Jones, who had been one of the busiest bankruptcy judges in the country, resigned in October 2023 following the revelation of his relationship with Freeman. He had presided over some of the largest corporate bankruptcies in recent years, including those of JCPenney, Neiman Marcus, Chesapeake Energy, and Party City.
His departure sent shockwaves through the legal community, sparking debate about judicial ethics, disclosure obligations, and the integrity of the bankruptcy process. The case also raised broader questions about what remedies are appropriate when a judge’s undisclosed conflict may have influenced financial decisions affecting debtors, creditors, and law firms.
Broader Significance
The Jackson Walker settlement represents more than a financial transaction — it is a cautionary tale about transparency and trust in the legal system.
- For Law Firms: The case is a reminder of the importance of rigorous conflict checks and timely disclosures. Even the appearance of impropriety can lead to costly litigation, reputational harm, and regulatory scrutiny.
- For Clients: These settlements highlight the remedies available when ethical breaches potentially compromise court-approved transactions.
- For Courts: The case reinforces the need for oversight mechanisms and clear ethical guidelines for judges and practitioners to preserve public confidence in judicial proceedings.
If approved, the $1.4 million resolution with Old Copper will mark the largest single settlement yet involving Jackson Walker over Judge Jones–related fee disputes. The outcome may set a precedent for how similar cases are handled going forward, shaping expectations for both law firms and bankruptcy courts nationwide.
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