The incredible oblivion of Judge Marvin Isgur

Inside the tight-knit circle of attorneys and judges that fueled the meteoric rise of the Southern District of Texas bankruptcy court — and its spectacular fall.

On a mild Houston day in March 2021, Judge Marvin Isgur prepared to oversee the only case on his docket that morning. It was a motion to recuse his longtime colleague on the bench, David Jones, from a case involving a bankrupt engineering company.

Motions are the bread and butter of the US court system, and litigants use recusal motions to request a new judge if they have concerns about a conflict of interest or bias. An independent judge hears the arguments and decides if there is enough evidence to grant the motion, requiring the assigned judge to step aside.

On this day, the circumstances were anything but usual. The motion, filed months earlier, had just been updated with a shocking allegation: Jones was in a “romantic relationship” with attorney Elizabeth Freeman, his former clerk and then a lawyer at Jackson Walker, a Texas firm that often appeared before Jones and Isgur in the Southern District of Texas bankruptcy court, where the pair of judges handled the most high-profile cases.

Michael Van Deelen, the plaintiff in a shareholder case against executives of the engineering company McDermott International, wrote that he’d received a document in the mail alleging the relationship. The note went further, saying that Freeman was the “strategic link” between Jackson Walker attorneys, including Matthew Cavenaugh, and cases handled by Jones.

Freeman and Cavenaugh were both well known to Isgur. Freeman had clerked for Jones for six years and later joined a special committee the two judges created as they centralized large bankruptcy cases under their control. Cavenaugh was a former Isgur clerk. And yet Isgur had chosen himself when Jones asked him to assign a judge to decide the recusal.

His choice wasn’t all that surprising given their 30-year relationship. As law partners, Isgur and Jones had formed a lifelong bond, and as bankruptcy judges, they had created an ambitious, if controversial, machine for attracting cases to the Southern District.

“It’s a very special and close relationship that came from being a mentor to a best friend to a colleague,” a member of the Houston bar said at a December 2023 hearing, “and created something very big and special in this district.”

An excerpt from an October 2023 lawsuit that would set off a crisis in the Southern District of Texas bankruptcy court.

Van Deelen’s motion threatened to unravel it all, exposing grave conflicts of interest and a tight network of informal communications that allowed lawyers, including Freeman, to leverage their access to bring in more cases, building their firm’s clout and revenue. “Judge Jones’s secret relationship with Ms. Freeman,” the US Trustee wrote in a November filing, “created an unlevel ‘playing field’ for every party in interest in every case Jackson Walker had before Judge Jones.”

Several Houston attorneys said they considered Isgur, a brilliant judge whose response to the recusal motion was out of character. Over nearly 20 years on the bench, during which he had overseen thousands of cases, he developed a history of being a stickler on questions of ethics.

In 2014, he issued an order to remove an attorney who’d worked at his former firm, W. Steve Smith, from his duties overseeing a bankruptcy estate after Smith had sought reimbursement for around $3,500 for a three-day personal stay prior to an oral argument in New Orleans.

In 2015, Isgur joined another judge to initiate an investigation into another trustee for what they considered improprieties surrounding a creditor payment plan—even though a former chief judge had described the approach as a longstanding practice. In at least two other cases, Isgur has personally questioned witnesses he called himself, including Jones, once, while he was appearing before Isgur as an attorney.

Bankruptcy judges have broad discretion, the author Michael Lewis has called “sensational powers,” to decide what evidence to allow in a case. And yet, in the Jones recusal case, the aggressive Isgur was nowhere to be seen.

First, he ordered the motion and the anonymously authored document sealed. Then, over the course of the roughly 40-minute long hearing, he refused to admit the anonymous note into evidence. He did not call to the stand either Freeman or Cavenaugh, though he knew them both well. And when Van Deelen asked for time to depose witnesses about the allegations, Isgur shut that down, his tone giving off a sense of frustration.

“No, your motion for a continuance is denied,” according to audio of the judge’s remarks. “I’m not going to let you take a deposition about the contents of an anonymous letter. That would be totally outrageous.” Minutes later, Isgur denied the motion for recusal. A US district court judge later denied Van Deelen’s appeal, agreeing that the note had no evidentiary value.

The matter may have been largely forgotten, one of many denials handed down every day throughout the United States court system.

But the anonymous note resurfaced two and a half years later when Van Deelen filed a lawsuit against Jones, alleging retaliation, this time relying on evidence that Jones and Freeman owned a home together, (Jones has filed a motion to dismiss in that case, which remains pending.)

Over the next 10 days, Jones admitted he and Freeman were in a romantic relationship, earned a rare public rebuke from the Fifth Circuit Court of Appeals, and resigned.

It was as if a meteor had hit one of the country’s most influential bankruptcy courts. His resignation led to 3,500 cases being reassigned and sparked the Department of Justice to demand Jackson Walker give back nearly $23 million in fees it had earned in cases that Jones had overseen. The Southern District juggernaut, which had pulled in scores of massive cases and enriched the Houston bankruptcy bar, was over.

But Isgur remained unscathed. In her written rebuke of Jones, the Fifth Circuit chief judge noted that “on information and belief, the judge who ruled on the motion to recuse was unaware” that Jones and Freeman were romantic partners. However, an extensive document trail, social media posts, and nearly a dozen sources inside Houston’s legal community suggest that the narrative is implausible.

Freeman’s attorney, Tom Kirkendall, declined to comment on her behalf. Isgur did not respond to requests for comment sent through his staff. Jones’ attorney, Gary Cruciani, did not respond to requests for comment.

In October 2023, the Fifth Circuit Court rebuked Judge David Jones but said that his longtime colleague, Judge Marvin Isgur, had been “unaware” of Jones’ inappropriate relationship.

“Typically, best friends know the identities of their friends’ long-term romantic partners,” Nancy Rapoport, an influential legal ethicist and professor at the University of Nevada Las Vegas William S. Boyd School of Law, wrote in a paper about the ethical questions surrounding Jones’ relationship. “But only Judge Isgur knows what he knew or didn’t know about the relationship.”

In fact, the rise of the Southern District was inseparable from the close relationships between Jones and Isgur, Jones and Freeman, and the firm where Freeman was a partner, Jackson Walker. The Fifth Circuit found that “substantial” money was involved.

‘I love him like a father’

Isgur and Jones first began working together in 1993, when Isgur and Kirkendall, then his law partner, hired Jones out of the University of Houston law school as an associate, Jones said in a February 2022 interview for an American Bankruptcy Institute podcast. Jones was being pursued by a much larger firm, he told someone at the time, when Isgur and Kirkendall persuaded him to join their small litigation boutique. Both men spoke at Jones’ wedding reception at Brennan’s, the venerable Houston restaurant, according to someone who attended.

It would prove to be his most influential professional relationship. “They took me in, taught me how to think, how to write, and how to be a lawyer,” Jones said of Isgur and Kirkendall in March 2023 when he accepted a lifetime achievement award from Emory Law School. Isgur was chosen to introduce him.

For years, Isgur and Jones lived a short distance away from each other in a wealthy enclave on Houston’s west side. Jones would go sailing on Galveston Bay with Isgur on his boat. The two men often ate together at hole-in-the-wall restaurants, according to two people familiar with their habits. One of the sources said they were frequently joined at these dinners by their wives.

By some measures, the two men made an odd pair. The elder judge was a Houston native, a member of the influential Winograd real estate family, and a nondrinker. He wore his receding hair cropped close and wire-rimmed glasses that gave him the authority of a man steeped in the law. Behind the bench, he was always in control. Jones, on the other hand, was voluble and audacious. A North Carolina native estranged from his father, Jones liked sharing a drink with members of the Houston bar. As a judge, he would sometimes berate litigants and attorneys in his court, and he liked to boast about how, as an attorney, he had pushed the boundaries of the law.

Yet over the years, their relationship blossomed into something almost familial. “I love him like a father,” Jones once said of Isgur. In introducing Jones at the Emory event, Isgur called him his “stubborn adopted son.”

“There is no better feeling than when a parent watches his child surpass him in capability and achievement,” Isgur said. “I am so proud.”

Isgur’s only actual child, Sarah, is a conservative lawyer known for her close relationships with Supreme Court justices and her three years in the Trump administration. Most recently, she’s made a name hosting a must-listen legal podcast, Advisory Opinions, in which she has repeatedly explored questions of judicial ethics.

When Jones appeared on the podcast in 2020, their dynamic was warm. Sarah called him a “family friend,” and Jones congratulated Isgur on her pregnancy. Several years earlier, when Sarah got married in the federal courthouse, her father officiated and Jones and his then wife were in attendance, according to one wedding guest.

After Isgur became a bankruptcy judge, appointed by the Fifth Circuit Court of Appeals in 2004, Jones joined Porter Hedges, a Houston law firm whose 1981 founding made it a relative newcomer to the city’s legal scene. Porter Hedges’ scrappy status gave Jones the freedom to further develop into an aggressive litigator, making his name representing trustees charged with selling off assets in Chapter 7 bankruptcies.

Legal records suggest that Jones may have first crossed paths with Freeman in 2002, when he was still in private practice with Isgur; that year, she represented a creditor and Jones a trustee in the same bankruptcy case. Over four days in March 2008, each attorney was assigned to a case the other had already been working on for months. By the following year, Freeman had joined Porter Hedges as a partner to work with Jones in the bankruptcy practice, according to a person who knew them at the time. Her husband had recently joined Porter Hedges, too.

At Porter Hedges, Jones and Freeman worked closely together. In several pleadings from that time, they appear on the same signature block, indicating that they were jointly handling a case.

A 2022 tamale party was attended by Jones (in the gray cap) and his former clerk — and secret romantic partner — Elizabeth Freeman (in the Keystone T-shirt at left).

It’s unclear when Jones and Freeman first became romantically involved, but Porter Hedges appeared to take a more liberal stance on interoffice romance than many Big Law firms did at the time. John Higgins, a senior partner, started dating Whitney Ables when they worked together at Porter; they were later married in a ceremony Jones officiated. Josh Wolfshohl also met his wife Amy Lucas while they were working together there; both remain at the firm. And Porter hired Freeman even though her husband was already a partner there.

Isgur, during his time on the bench, had encouraged Jones to consider becoming a bankruptcy judge. When Judge Wesley Steen retired from the Southern District of Texas bankruptcy court in 2011, Jones got his chance, and applied to the Fifth Circuit — whose judges appoint bankruptcy judges in the circuit — to fill Steen’s seat. Jones would again become a close colleague of his mentor.

Isgur moved quickly to get Jones hearing cases, swearing him in at a private ceremony in advance of the official investiture, a small gathering he hosted in his courtroom on the fourth floor of Houston’s federal courthouse. About two dozen people were there, according to two people who attended, including Freeman. She was tasked with taking pictures, and at one point, her emotions overcame her and she teared up, according to one of the attendees.

By then, Freeman had already decided to leave her job at Porter Hedges, where she was poised to earn handsomely by taking over casework from Jones. That year, partners at Houston’s law firms earned on average nearly $800,000, according to one compensation survey. Instead, she took up a position as Jones’ permanent clerk, likely making closer to $100,000 in a role she would hold for the next six years. The following year, her husband moved to dissolve their marriage, according to Harris County records.

“When I heard she went and became his law clerk, I thought that’s a surprise. I would not have expected that to be a typical career path for Liz,” said a former colleague of theirs at Porter Hedges. “When I heard that they were eventually found to be cohabitating, it didn’t surprise me.”

Just months after Freeman began her clerkship, Jones too got divorced.

“I probably should have talked with, at that time, my wife — now my ex-wife — about that decision, because that’s obviously a huge change,” Jones told Reuters in 2020. “I just decided that it was something that I was going to do and if I was going to do it, I was going to devote the same energy into being a judge that I did into being a lawyer.” He suggested in another interview that the couple experienced tension over the decrease in his pay.

Jones kept the house he had shared with his wife, and sometime later, Freeman moved in with him, according to one person aware of the arrangement. The real estate photos Jones used later to sell the home showed what looked like a boy’s bedroom, even though Freeman was the only one in the couple with kids, and a closet that held women’s clothing.

In 2017, Jones purchased a house in a gentrifying neighborhood in northwest Houston, not far from his previous home. He and Freeman toured the home together, and Jones ultimately paid $985,000 in cash, Bloomberg reported in April. Real estate records show that they came to jointly own it.

Whether Isgur visited Jones at the homes he shared with Freeman is unclear, but the elder judge would have witnessed the dynamic between the pair over the six years they all worked closely together at the Houston courthouse.

“They set up the special panel because they are great judges, and they are great arbiters of the law, and then to say they don’t have the same sensibility with the people they have lunch with beggars disbelief,” said Bruce Markell, a former federal bankruptcy judge in Nevada who now teaches law at Northwestern’s Pritzker School of Law. “It’s not like Isgur didn’t know her. Whether he knew about the relationship or not I don’t know, but it would be difficult for me to think that Isgur was taken completely by surprise by the allegations.”

A plan to grow the Houston court

When Jones joined the bankruptcy court for the Southern District of Texas, Delaware and New York dominated as the venue of choice for major corporate bankruptcies. But Jones and Isgur came up with a plan to make Houston a magnet.

Corporate bankruptcies are big business. For decades, the process has been used by companies with too much debt and not enough cash to find fresh footing — and over time, it’s become one of the most lucrative areas of law. Top attorneys can make up to $2,500 an hour in bankruptcy cases, the kind of money that can warp a system. In recent decades, bankruptcy forum shopping has become rampant, with firms filing in whatever federal district they like, just by showing a local address there. Sometimes a PO Box is enough. So lawyers tend to congregate where they find corporate-friendly judges who have a reputation for quickly moving companies through the process and signing off on lawyers’ fees.

While Delaware and New York dominated as the venues of choice for major bankruptcies, millions of dollars flowed into the coffers of local law firms. The judges became their own power centers, with every decision affecting the paychecks of local lawyers and the fortunes of their firms: Decide against the debtor and their law firm might seek a different venue for their next client.

Houston judges had tried to break into the upper ranks before, without success. Judge William Greendyke promised attorneys in 2000 that the judges’ “war on fees is over,” according to Lynn LoPucki’s book Courting Failure. A year later, Houston-based Enron still chose New York for its spectacular bankruptcy.

In 2016, Jones and Isgur began to hatch a more ambitious plan to make Houston welcoming. Success would mean more money for the men and women of the local bankruptcy bar and more power and prestige for the Southern District of Texas. They created a special panel for complex cases, changing Southern District rules so extremely large or complex Chapter 11 bankruptcies — including those involving at least $200 million in debt — would get an unusual degree of predictability. Even though the Judicial Conference, which sets policy for the federal courts, had long supported the random assignment of federal judges in order to deter judge-shopping, the new Southern District scheme would assign every complex case to just one of two judges: Jones or Isgur.

“Overnight, bankruptcy lawyers that typically worked on large, complex cases before any one of 3 or 4 sitting bankruptcy judges,” Jackson Walker wrote in a court filing last month, “now would be practicing almost exclusively (and routinely) before 1 of 2 bankruptcy judges.”

It was an effort, the firm said, to “make procedures more transparent and predictable.”

In fact, the two men sought to achieve an extraordinary degree of consistency across their two dockets and would often discuss each other’s cases, according to someone who heard it directly from Jones. The two men would walk back and forth to each other’s chambers on the courthouse’s fourth floor. “We talk every day, multiple times, whether he wants to or not,” Jones said in his remarks last year at Emory. “I can’t imagine him not being right down the hall.”

The judges threw open the doors to the bankruptcy bar, creating a committee of bankruptcy attorneys to advise the judges on industry best practices. Among the founding members were Patricia Tomasco, then a partner at Jackson Walker; Christopher Lopez, an attorney at Weil, Gotshal & Manges who would go on to become a Southern District judge; and Greendyke, who had by then retired as a judge.

Another reform was to promise attorneys for major corporations concierge access to court officials to expedite scheduling and process matters. Jones assigned his case manager, Albert Alonzo, a government-issued cell phone and told him to answer it whenever it rang. Jones would call him in the middle of the night to test his resolve, and Alonzo always answered, as the judge told Reuters in 2020.

“He is the public’s way to talk with me,” Jones told the Texas Lawbook in 2020. “He has tremendous scheduling authority. He’s great at customer service.”

As they worked together, the two men grew close. Jones said he spent time with Alonzo’s family during the holidays and at least once he and Freeman attended Alonzo’s annual tamale-making party together, according to a social media post.

A close circle of lawyers around Jones

Isgur was known to avoid spending time with Houston’s bankruptcy bar outside of the courthouse or official conferences. But just down the hall, Jones routinely blurred the boundaries between his professional and personal lives, becoming friends with a group of attorneys who often appeared before him.

Jones had issued an order in 2016 arguing against “unspoken practices, or disparate treatment” even as he was offering special access, in a variety of ways, for this small network of lawyers.

According to two attorneys close to Jones’ circle, a small group of lawyers would often hang around Jones’ chambers, which he decorated with framed news articles about him. One, a 2020 Houston Chronicle profile, was headlined: “Meet the judge who saved the Texas bankruptcy practice.” (After that article came out, someone taped up a piece of paper outside the fourth floor elevators with the word “savior” and an arrow pointing to Jones’ courtroom, a third attorney recalls.)

The locked entrance to his chambers became such a revolving door that when Van Deelen pressed the buzzer in October 2023, intending to hand his retaliation lawsuit to Jones, he was let in with no questions asked, he said. Alonzo once posted that a lawyer close to Jones, Susan Tran Adams, stopped by with coffee and empanadas.

On his frequent visits to Jones’ chambers, Isgur likely saw the crowd, which often included Freeman. Two attorneys specifically recall Isgur entering Jones’ chambers while other lawyers were present.

Jones said he and some of the lawyers formed a cooking team that would enter local barbecue and chili competitions, and several in the group recently started a nonprofit together. Social media posts over the years of informal gatherings show Jones, Freeman, and Alonzo hamming it up with other lawyers.

The following year, a Houston bankruptcy attorney invited a group of lawyers, including Jackson Walker attorneys Matt Cavenaugh, Veronica Polnick, and Genevieve Graham, as well as Freeman, then running her own practice, to a party for Jones, according to someone who was told about the party.

An October 2022 cookout featured multiple members of the Houston bar, including Jones (back row, gray hair) and Jackson Walker attorneys Veronica Polnick (back row, sunglasses on forehead), Genevieve Graham (squatting center with red cup), and Freeman (sitting center with red sneakers).

At the root of many of these friendships was a drop-in evidence class Jones began to lead for Houston lawyers soon after he joined the bench. The free class started small and invite-only, but after several years grew to number 40 or 50 students, according to someone who attended.

Regulars included attorneys who worked at, or would later join, Jackson Walker, according to emails, such as Polnick, Graham, and Cavenaugh. According to a recent Jackson Walker legal filing, “other bankruptcy judges and prominent local practitioners attended the classes” as well.

“They were well attended,” said another Houston bankruptcy attorney. “I attended a couple, and you could really see the young attorneys clicking.”

Jones clicked with them, too. “There are several young lawyers that are present tonight that I first met in a weekly class that I teach in my courtroom on most Wednesdays,” Jones said in his prepared remarks for the Emory event last year. “It also turned out that the class was as much of a learning session for me as it was a teaching session. Not only did we become better professionals together, we became friends.”

Jones officiated the marriages of at least two lawyers who attended those classes: Tran and Graham.

The class was effectively yet another Jones strategy for attracting bankruptcy filings to the Southern District — and a way for members of the Houston bar to explore tactics they might later deploy in Jones’ court.

The classes were sometimes also a ticket to career advancement. At least one young law graduate, Christina Morrison, used the classes to successfully audition for a clerkship with Jones.

Isgur was well aware of the tight legal community around Jones’ evidence class. He told the assembled crowd at Emory how “young lawyers show up weekly — dozens of them — to learn trial tactics and bankruptcy from David.”

After I tried and failed to find an opportunity to introduce myself to Isgur at the courthouse, I visited Isgur’s home in April, hoping to find out how the judge was currently feeling about his adopted son and to ask when he first became aware of Jones’ relationship with Freeman.

A woman who appeared to be his wife answered, keeping the door closed and speaking through a side window of the stately brick home. “Get the hell away from us,” she said, after I identified myself as a journalist. When I turned to leave, the woman noticed that my hair was pulled back in a ponytail. She commented on the style, and when I turned back to face her, she began to mock me, moving her hips in a side-to-side dance. “Do you want to wear a skirt or earrings? Are you trans?”

As her voice rose, she hurled an expletive and screamed, “Get off the property!”

Rumors of a romantic relationship

Jones and Isgur’s efforts soon began to attract hundreds of filings to the district. Big names showed up: Neiman Marcus and J.C. Penney, then Chesapeake Energy.

Tomasco, the Jackson Walker partner who was a member of the complex cases committee, had already been doing her part to build up the court and drum up business for her firm by flying to New York in a campaign to convince the Big Law bankruptcy attorneys to bring their cases south. But the flow of cases only escalated after Freeman left her clerkship, in May 2018, and joined the firm.

Freeman quickly became known as someone who bristled over complying with protocols and failed to loop her colleagues in on critical communications.

She and Cavenaugh set up a business agreement that, according to two of their professional contacts, appeared to be premised on Freeman’s tight relationship with Jones paying off. Though Freeman hadn’t worked at a law firm in six years, Cavenaugh and Freeman agreed to split the origination income they got for bringing in new cases, according to the two sources, who were told about the arrangement. Like anyone exiting public service, Freeman hadn’t done marketing in years. If she hadn’t delivered, it could have meant a substantial compensation loss for Cavenaugh. Instead, according to a November Jackson Walker filing, Freeman enjoyed “quick and substantial success.”

“Sharing origination fees is common in the industry, and it is well known that sharing is part of our culture at Jackson Walker,” firm spokesperson Jim Wilkinson said by email. “We quite often share origination fees among attorneys irrespective of location and there is nothing out of the ordinary with our compensation practices.”

Already, the rumors about Jones and Freeman’s romantic relationship were frequent enough that at least one attorney confronted Jones about it; Jones responded by denying the relationship.

“I would see them going to lunch together,” said the former colleague from Porter Hedges. “It’s not unusual for judges and their clerks to go to lunch together but we typically think of a federal judge’s law clerk in bankruptcy or district court as a substantially younger person relatively recently out of school. The optics were different.”

Now, Jackson Walker had a partner with a direct line to the leading judge of the Southern District of Texas bankruptcy court. Business boomed. During Jones’ career on the bench, two firms, Kirkland & Ellis and Jackson Walker, represented the most debtors with confirmed Chapter 11 plans, according to data provider Lex Machina. And Kirkland & Ellis — whose attorneys were invited to Jones’ evidence class as special guests at least twice, according to emails — often relied on Jackson Walker as its local counsel.

Between 2012 and 2017, before Freeman left for Jackson Walker, just 27 companies with liabilities of $100 million or more filed their bankruptcy in the Southern District of Texas, according to BankruptcyData. From 2018 through 2023 that number more than quadrupled to 148. During the three years ending in 2023, Jones and Isgur together handled nearly a third of all bankruptcy cases with liabilities over $1 billion.

Jackson Walker was involved in a large number of them, with Freeman, as the US Trustee said, creating an “unlevel ‘playing field.'”

The Trustee Program has filed several motions to force the law firm to disgorge a total of nearly $23 million in what it called “tainted” fees collected in cases involving Jackson Walker that were heard by Jones as far back as 2018. More than $2 million of those fees were personally collected by Freeman.

As a clerk, Freeman was present while Jones and Isgur were concocting the idea of the complex cases committee. As a Jackson Walker attorney, she became a formal member. But Freeman continued to act as if she were an insider. When Tomasco, for example, asked the committee members in a December 27, 2021, email if the court’s hybrid hearing schedule would change, Freeman responded, according to correspondence obtained through a public records request. “It will continue until further notice,” she wrote from her Jackson Walker address.

By this point, Isgur had become one of the busiest bankruptcy judges in the country. Jackson Walker attorneys including Cavenaugh and Freeman were frequently appearing in front of him.

And companies were now aggressively venue shopping in the Southern District of Texas.

Bankruptcy rules require a company to be based in the district for 180 days. But court filings in the 2023 bankruptcy of the biopharmaceutical company Sorrento show that Jackson Walker attorney Veronica Polnick — another former Jones clerk — visited a UPS Store on the outskirts of Houston to open a mailbox less than 10 hours before the company filed for bankruptcy.

That UPS store soon became the principal place of business for other Jackson Walker clients, according to legal filings: medical technology firm Surgalign Spine Technologies, sweet treat subscription company Candy Club LLC, and industrial food startup AppHarvest Products, all with mailboxes registered by Polnick — in one instance for a case filed by Cavenaugh.

So much bankruptcy business was coming into Houston that attorneys there were getting bold.

In April 2022, the bankruptcy bar met for a conference at the Omni Hotel in Corpus Christi, a chance for attorneys to get continuing education credits — and face time with judges. A panel titled “Judges Panel — Ask Anything You Want!” at the end of the three-day event gave attorneys an open forum to ask questions of Jones, Isgur, and the other bankruptcy judges of the Southern District of Texas.

As Cavenaugh roamed the room with the mic, one attorney spoke up, saying clients had reported that other attorneys were suggesting they had a special connection with the judges of the Southern District. The attorney asked the judges how lawyers should respond the next time they heard something about these attorneys’ special status, according to someone in attendance.

Jones, in prefacing a noncommittal answer, suggested that the question was likely directed at him, the source recalled.

By then, Cavenaugh and Jackson Walker were aware of the allegations of a Jones-Freeman relationship, according to documents the firm later filed in court. Van Deelen had received the explosive anonymous note 13 months before, and an email he sent to Cavenaugh right after receiving it had sparked an apparently cursory internal Jackson Walker investigation.

Freeman admitted that she and Jones had been in a relationship, but said it had ended, according to a draft letter the firm’s then-general counsel wrote in August 2021 to an outside ethics consultant. “Elizabeth has confirmed that there is no current romantic relationship between herself and Judge Jones and that none is expected going forward. According to Elizabeth, there has been no romantic relationship since prior to the time in March 2020 when COVID caused so many of us to shift to remote work and virtual-only meetings. Judge Jones and Elizabeth each own their own homes; they do not and have not lived together.”

The letter also described Freeman’s critical role bringing in new business to the firm since she had joined in 2018. “Jackson Walker’s debtor practice grew very substantially during this time, including cases in which we took an expansive local counsel role, with Kirkland Ellis acting as lead counsel, and cases in which we were lead debtor’s counsel. Much of this work was in cases before either Judge Isgur or Judge Jones. This success was a team effort, involving other bankruptcy partners as well, but Elizabeth’s leadership and contribution were recognized as integral.”

The letter said Jackson Walker had requested that Freeman stop working on cases once they’d been filed with Jones for a two-year cooling off period from the date Freeman claimed their romance had ended. While the firm understood “that a close personal relationship remains” between Freeman and Jones, the letter said, “no further details were sought at that time.”

Jackson Walker later learned Freeman hadn’t been truthful. The firm’s counsel at Norton Rose Fulbright — Greendyke, the former bankruptcy judge — said in a November pleading that in 2022 Jackson Walker had “learned, quite by accident, that Ms. Freeman’s denial was possibly false or at least no longer true. When confronted again she initially denied the relationship but later on admitted to a current romantic relationship.”

When Freeman retained counsel, she chose someone with close ties to her romantic partner: Tom Kirkendall, Jones’ first boss in the legal profession and someone who described Isgur as “a wonderful law partner of mine for over 10 years” and “a dear friend.” (Kirkendall declined to comment on other aspects of this story.)

Later that year, Jones called Cavenaugh to his chambers after a hearing and “insinuated” that he was “unhappy” with the firm’s push to disclose the relationship, the firm said in another filing. Instead, Jackson Walker said, Jones handed Cavenaugh a piece of paper with a proposed disclosure that listed a “close personal relationship” with Freeman sandwiched between references to a “social friendship” with Polnick and with Graham. Jackson Walker, Jones insisted, “needs to make this happen,” instructing the firm to file the disclosure in all future cases before him, according to the filing.

Finding the language “potentially misleading or untruthful,” Jackson Walker said it negotiated Freeman’s departure instead; she left the firm in December 2022 to set up her own practice.

But Jackson Walker appeared to keep knowledge of the relationship to itself. The firm’s attorneys continued to recommend Freeman for legal work on cases before the Southern District.

“Jackson Walker has a strong and proven culture of ethics and integrity, and when we learned about this issue, we acted responsibly,” Wilkinson, a spokesperson for the firm, said by email. “Our firm has been transparent, and our fulsome public filings speak for themselves.”

Conflicts of interest appeared immediately. Within weeks, Freeman, serving as contract attorney to bond issuer GWG Holdings Inc., whose bankruptcy case was being handled by Jackson Walker, told Judge Isgur she took “some comfort” knowing that Jones was serving as mediator in the case, according to a December 16, 2022, transcript. During the mediation, in which Freeman participated, Jones suggested naming an independent trustee, according to public remarks by Mike Warner, a lawyer involved in the case.

Freeman was ultimately chosen by the creditors to oversee the wind-down trust in that case, a role expected to earn her $100,000 a month. Neither Jones, nor Jackson Walker, nor Freeman disclosed the relationship.

Containing the fallout

After the romantic relationship became public last October and Jones resigned, Isgur found himself once again at the center of a recusal matter. The estate of a creditor in 4E Brands, a manufacturer of hand sanitizer, whose bankruptcy case was transferred from Jones to Isgur, argued in October that Isgur was too close to Jones to rule on the case independently. The US Trustee, which oversees federal bankruptcy cases, supported the motion, arguing the case should never have been heard by Jones in the first place.

Yet in an apparent attempt to contain the fallout from Jones’ ethics implosion, the Southern District’s chief bankruptcy judge, Eduardo Rodriguez, ruled against the creditor. Isgur can continue to hear the case, he ruled, writing in the December 2023 opinion that lawyers for the creditor “failed to demonstrate much other than that former Judge Jones and Judge Isgur are close friends.” (The creditor has filed an appeal.)

Rodriguez wrote that the estate had provided no evidence Isgur had “extrajudicial knowledge” of Jones’ relationship or showed a “high degree of antagonism” in denying Van Deelen’s March 2021 recusal motion — despite the magnitude of Isgur’s missed opportunity.

In the Sorrento case, a litigant filed in February to remove the case from the Southern District of Texas. Again, the US Trustee lent its support, calling Sorrento’s PO Box maneuver “a case of forum shopping and venue manipulation taken to a new and unprecedented extreme.” Again, a Southern District judge shut it down. This time, Judge Lopez — a member of the complex cases committee turned judge — denied the motion. (Lopez had replaced Isgur when Isgur stepped down from the complex cases panel at the end of 2022; Isgur returned to the panel as Lopez’s partner after Jones resigned in disgrace.)

The Southern District has stuck to the model Jones created, of sending every complex case to a panel of two judges, flouting new guidance issued by the Judicial Conference of the US in March that further promotes random case assignment to limit “the ability of litigants to effectively choose judges in certain cases by where they file a lawsuit.”

Effectively choosing judges, and knowing with a high degree of clarity how those judges would rule, was the very essence of the Jones machine.

Meanwhile, the US Trustee’s motions seeking to disgorge nearly $23 million in fees Jackson Walker collected in 33 cases in front of Jones has been bottled up. Those cases have been combined into a single proceeding, overseen at this stage by Rodriguez. That consolidation delays or even prevents what many would like: an impartial judge from outside the district hearing the cases and putting key players in the machine under oath.

The US Trustee began taking discovery on May 15, according to a scheduling order, but a settlement could halt that process and eliminate the risk that Cavenaugh, Freeman, Jones, or even Isgur would have to testify.

That might be fine with the Fifth Circuit.

Earlier this year, the circuit judges chose Alfredo Perez, a retired Weil, Gotshal & Manges bankruptcy attorney, to replace Jones. The pick was widely interpreted as a sign that the Fifth Circuit had come to enjoy Houston’s recent success and didn’t want it to end with Jones’ career. Isgur told Bloomberg recently that he plans to give up handling complex cases, which would clear the way for Perez to take over. Former chief Southern District judge Richard Schmidt told Bloomberg that Perez’s experience handling large cases would be a “godsend” for the district. “I can’t imagine a better selection given the circumstances,” he said.

Meanwhile, according to Debtwire, the Southern District of Texas’ popularity has plunged. Through May 4, only 10% of the large Chapter 11 bankruptcy filings this year tracked by the data provider have been filed in the district, less than half what it was last year.

That’s well short of Delaware’s current share — 39%