On Wednesday, December 4, 2024, Reuters reported that a Texas law firm, Jackson Walker, lost a significant legal battle to maintain attorney-client privilege regarding communications with outside ethics counsel amidst a scandal involving a partner’s romantic relationship with a federal bankruptcy judge. The case centers on Elizabeth Freeman, a partner at Jackson Walker, and U.S. Bankruptcy Judge David Jones, who presided over numerous cases involving the firm.
The controversy began in 2021 when Jackson Walker sought guidance from the law firm Holland & Knight after learning of Freeman’s intimate relationship with Judge Jones, which had been disclosed by a pro se litigant during a court case. Initially, Freeman assured the firm that her relationship with the judge was in the past. However, it was later revealed that Freeman was living with Jones, prompting Jackson Walker to consult ethics experts for further advice in 2022.
In the course of addressing the ethical implications of this relationship, Jackson Walker shared two memos received from Holland & Knight with Freeman’s private attorney. The firm argued that this disclosure was made to clarify that Freeman could not continue her role at Jackson Walker. However, this decision led to an adverse ruling in federal court.
U.S. District Judge Amy Baggio issued a ruling stating that Jackson Walker had forfeited its right to claim attorney-client privilege over communications with Holland & Knight regarding the ethical quandary posed by Freeman’s relationship with Jones. Consequently, Holland & Knight is required to provide documents to the U.S. Trustee’s office, which is overseeing bankruptcy proceedings and investigating the law firm’s conduct.
The U.S. Trustee’s office has alleged that Jackson Walker improperly received over $21 million in fees across at least 33 bankruptcy cases due to a failure to disclose Freeman’s relationship with Jones. Following the emergence of the scandal, Judge Jones resigned in October 2023.
Jackson Walker did not comment on the privilege ruling through a spokesperson, and there was no immediate response from Freeman or her lawyer regarding the allegations. The law firm maintains that it acted reasonably in handling the situation and points to its consultations with ethics experts as evidence of its responsible approach.
Despite Jackson Walker’s assertions, another Houston federal bankruptcy judge had already concluded in September that the firm had breached its ethical duties related to the case. The U.S. Justice Department, which oversees the U.S. Trustee’s office, also did not respond to inquiries regarding the matter.
The controversy escalates as Jackson Walker faces scrutiny from the U.S. Trustee, which has called for the vacating of orders that approved fees awarded to the law firm and demanded the return of funds received during the period of ethical ambiguity.
Jackson Walker had initially approached Holland & Knight in late 2021, following the revelation of the relationship. The firm alleged that Freeman insisted at that time that her connection with Judge Jones had ended. However, after discovering that the two were back together, Jackson Walker sought further ethics advice and suggested that Freeman retain her own legal counsel.
Negotiations led by Freeman’s attorney and Jackson Walker resulted in discussions surrounding a separation agreement. During these negotiations, Jackson Walker disclosed the ethics memos to Freeman’s lawyer, which ultimately contributed to the waiver of privilege. The U.S. Trustee’s office contended that by sharing these memos, Jackson Walker effectively waived not only privilege over the documents but also over related communications.
While Jackson Walker accepted that it had waived privilege concerning the memos, the firm argued that its other communications with Holland & Knight and Freeman’s attorney should remain protected. The firm contended that broad subject-matter waivers should only apply under exceptional circumstances where fairness necessitates the disclosure of contextual information.
In her ruling, Judge Baggio sided with the U.S. Trustee’s office, determining that Jackson Walker had both expressly and implicitly waived privilege. The judge emphasized the firm’s disregard for the privilege and the manner in which it invoked the advice of Holland & Knight during its defense against the U.S. Trustee’s efforts to reclaim fees.
Source: Reuters
