Kirkland Partner Said Romance ‘Tarnishes’ Ex-Judge’s Cases (1)

A top restructuring attorney for powerhouse law firm Kirkland & Ellis LLP told government attorneys that a relationship between an ex-judge and a former bankruptcy partner for Jackson Walker LLP should have been disclosed.

Kirkland’s Joshua Sussberg also said during a September deposition, the transcript of which was obtained by Bloomberg Law, that he thought former Houston bankruptcy judge David R. Jones experienced a “lapse in judgment” related to his previously undisclosed relationship with Jackson Walker attorney Elizabeth Freeman.

Kirkland often teamed up with Jackson Walker as local counsel to bring large, complex Chapter 11 cases to the Southern District of Texas bankruptcy court, which became a favored venue for Kirkland during Jones’ tenure.

Read More: Ex-Bankruptcy Judge Got Combative in Secret Romance Questioning

The deposition was taken as part of a lawsuit in which the government has accused Jackson Walker of breaching its ethical duties, a charge the firm rejects. Government attorneys, noting that Jones and Freeman owned a home together, argue the relationship should’ve been disclosed.

“To the extent that we were aware of an actual financial relationship, I can’t tell you exactly what it was we would have done, but we absolutely would’ve made certain that that was out in the open for fear of disrupting an existing case or go forward cases,” Sussberg said.

Comments by Sussberg, one of the most high-profile attorneys in the US for large corporate bankruptcies at the world’s largest firm by revenue, could become salient in efforts by the Justice Department’s bankruptcy watchdog to disgorge as much as $23 million in fees Jackson Walker collected in cases involving Jones while it employed Freeman.

A trial set for April will determine whether orders awarding fees to Jackson Walker should be vacated and whether the firm can be sanctioned.

Jones resigned soon after the relationship became public in late 2023 but the scandal has spurred several legal actions. Freeman left Jackson Walker in December 2022.

‘Great Concern’

During his deposition, Sussberg said if Kirkland knew of the relationship, it likely would have taken action to ensure it was “public,” noting that Kirkland has a “reputation and a brand that it’s protecting.”

Sussberg was asked by a government attorney whether he understood that due to the potential conflicts, orders issued by Jones may be voidable, and that it posed harm to clients.

“There’s all sorts of different legal rules, regulations, and ability to challenge, and remedies and the like, but I would absolutely say that I do believe it tarnishes all these cases,” Sussberg responded. “And that’s a great concern from our perspective.”

While bankruptcy rules may not technically require the disclosure of relationships with judges, Kirkland errs on the side of caution, Sussberg said. If there’s a question about whether something should be disclosed, it does so, he added.

To the extent Jackson Walker was aware of a romantic relationship, Sussberg said its attorneys were duty-bound to disclose it to Kirkland so it wouldn’t “infect and absolutely disrupt a pending case where we had no knowledge otherwise.”

Kirkland and Jackson Walker declined to comment. A Jackson Walker spokesman previously said the firm acted responsibly and promptly once it learned of the issue.

Kirkland has previously said it abided by its ethical responsibilities and made accurate representations to the court, including all required disclosures.

‘Absolutely Shocked’

Sussberg detailed what he was told in March 2021 when McDermott International shareholder Michael Van Deelen first alerted Jackson Walker that he had received an anonymous letter alleging Jones and Freeman had a secret romance.

McDermott, which filed for Chapter 11 to eliminate more than $4.6 billion in debt, was represented at the time by Kirkland and Jackson Walker. Jones presided over the bankruptcy.

Jackson Walker has said that it found out about a past relationship between Jones and Freeman while it was handling Van Deelen’s allegations and disclosed the situation to Kirkland.

Read More: Kirkland, Jackson Walker, Ex-Judge Beat Bankruptcy Romance Suit

Sussberg during his deposition said Kirkland saw the anonymous letter in March 2021. Soon after, the firm called Jackson Walker bankruptcy partner Matthew Cavenaugh.

Van Deelen’s “over-the-top” accusation of sexual favors in an email he sent to Jackson Walker along with the letter—which didn’t include that specific claim—seemed “ridiculous,” Sussberg said. Sussberg had clashed with Van Deelen during the McDermott case.

Nonetheless, Kirkland told Cavenaugh that, to the extent there was a relationship between Jones and Freeman, the firm had a disclosure obligation, Sussberg said.

“And he understood and acknowledged, and he didn’t say whether or not there was a relationship,” Sussberg said of his conversation with Cavenaugh. “And in response, just a day later, they filed the document that said the statements within the letter are defamatory.”

Jackson Walker never told Kirkland that there was a confirmed romantic, financial, or cohabitation arrangement between Freeman and Jones, Sussberg said. He also noted that outside legal advice Jackson Walker received after March 2021 related to Freeman wasn’t disclosed to him before the relationship became public.

Cavenaugh in March 2021 asked the court to seal the anonymous letter, which Van Deelen had used to support his motion for Jones to recuse himself from the McDermott case. Jones referred Van Deelen’s motion to his colleague, Judge Marvin Isgur, who ordered the letter sealed until it could be admitted into evidence.

Isgur in a hearing that month allowed the letter to remain sealed and wouldn’t allow the substance of its allegations to be discussed, calling it inadmissible hearsay.

From Kirkland’s standpoint, Isgur had a 20-plus-year relationship with Jones, who had described Isgur as a mentor, Sussberg said. If anyone would’ve known about Jones, it would’ve been Isgur, he added.

Sussberg said he didn’t become aware there was a relationship between Jones and Freeman until Jones admitted to it in a Wall Street Journal story in October 2023.

“We were absolutely shocked,” Sussberg said.