An unsigned, one-page bombshell of a letter made the rounds at Kirkland & Ellis, the world’s largest law firm by revenue. It threatened havoc for the firm and others that did business before the most powerful bankruptcy judge in the U.S.
The letter alleged that U.S. Bankruptcy Judge David R. Jones, chief of the bankruptcy court in Houston, was in a romantic relationship with Elizabeth Freeman, a Texas attorney who, as Kirkland’s co-counsel, helped the firm shepherd multibillion-dollar cases in Jones’s courtroom.
The intimate relationship was why Freeman and her law firm, Jackson Walker, were often brought in to represent large corporations, knowing they would likely have “the judge in their favor,” according to the letter surfaced in March 2021.
Such a conflict of interest would sink Jones and upend his work, elevating Houston’s bankruptcy court to the nation’s top tier. It would also taint judgments affecting hundreds of thousands of employees, investors, vendors, and others.
Certain lawyers at Kirkland had already heard talk that Jones and Freeman were lovers, and some spoke about it with other lawyers, according to people familiar with the conversations. If the anonymous letter was true—and became public—Kirkland risked losing its favorite bankruptcy judge. Jones was known for ruling in favor of Kirkland and other firms representing corporate debtors, according to dozens of bankruptcy lawyers who worked on cases Jones oversaw.
Jones became the nation’s busiest bankruptcy judge after Kirkland, the top U.S. firm for advising financially troubled companies, steered most of its largest Chapter 11 cases to his court.
The anonymous letter first went to Michael Van Deelen, a former high-school math teacher with a history of filing lawsuits against people he believed had wronged him. He was angry over a bankruptcy plan from Kirkland—approved by Jones—that wiped out Van Deelen’s $146,541 investment in an oil and gas drilling company that had gone bust.
Van Deelen sent a copy of the letter to Jackson Walker, where Freeman was a partner, and the law firm questioned her. Freeman acknowledged a romantic relationship with Jones that ended about a year earlier. According to court papers filed by both firms, Jackson Walker forwarded the letter to Jones and shared its allegations with Kirkland.
Van Deelen tried to submit the letter to the court to disqualify Jones from bankruptcy involving his lost investment. In a court hearing, a Kirkland partner argued that the letter was unsubstantiated and moved to exclude it as evidence. U.S. Bankruptcy Judge Marvin Isgur, Jones’s former law partner and a court colleague, sided with Kirkland. He denied Van Deelen’s request. Jones later signed an order to seal the letter from public view permanently.
Jackson Walker didn’t publicly disclose what it learned about the Jones-Freeman relationship at the time. Kirkland also kept quiet about the allegation. Jones remained Houston’s chief bankruptcy judge, and Freeman continued to work on Kirkland cases involving Jones.
It might have stayed that way. But Van Deelen, a pugnacious 74-year-old graduate of Stanford University and Massachusetts Institute of Technology, refused to let it rest.
This account is based on interviews with lawyers and bankers who worked in the Houston bankruptcy court, people who knew Jones and Freeman, people familiar with Kirkland and Jackson Walker, court records, and data from Debtwire, a financial and legal information provider. Jones declined to comment. Freeman, Kirkland, and Jackson Walker denied any wrongdoing in court filings.
Growth Spurt
Before Jones took the bench in 2011, most large corporate bankruptcies were filed in New York or Delaware.
Jones set out to change that. After he became chief judge in 2015, Jones enacted rules assigning the biggest Chapter 11 cases to either himself or Isgur, who had been his mentor in private practice.
Jones contacted Kirkland’s top bankruptcy partners, Jamie Sprayregen and Paul Basta. In December 2015, Sprayregen and Basta stopped by Jones’s chambers in Houston to meet with the judge, people familiar with the meeting said. A Kirkland representative described it as a brief meet-and-greet.
Low oil prices pushed many Texas oil drillers to insolvency the following year, and Kirkland began filing large energy-related bankruptcies in Houston. Later, when Covid-19 lockdowns triggered a rash of corporate defaults, Kirkland filed cases for JCPenney and Neiman Marcus department-store chains.
Kirkland brought in Jackson Walker as co-counsel for most of its Houston cases, including clients from out of state.
Jones and Isgur forged social ties with Kirkland and its senior bankruptcy lawyers. According to people familiar with the matter, Sprayregen shared food or drink with both judges.
Other large law firms, including Latham & Watkins and Weil Gotshal, also brought their big cases to Houston. Jones and Isgur became the first- and second-most active bankruptcy judges in the U.S., respectively, for cases involving more than $1 billion in debt. Kirkland accounted for more than half of such cases that passed through their court after Jones became chief judge.
Kirkland and Jackson Walker handled the 2020 bankruptcy filing by fracking-pioneer Chesapeake Energy. A group of unsecured creditors argued in court that Chesapeake was worth enough to allow them to own a piece of it after the restructuring. The co-author of a valuation guidebook for the American Bankruptcy Institute testified for those creditors, saying the company was likely worth $7 billion.
Jones decided Chesapeake was worth about $5.1 billion, a figure closer to the company’s preferred estimate. A lawyer representing the unsecured creditors asked Jones during a January 2021 court hearing to share his calculation.
“Not a chance,” Jones said. The ruling meant those creditors would be left with almost nothing. Chesapeake was listed on the Nasdaq after emerging from bankruptcy the following month. The market valued the company at $7.7 billion.
Jones excoriated people in court for potential conflicts of interest. In the bankruptcy of coal producer Westmoreland, he criticized the company’s adviser, McKinsey, for failing to disclose its connections to clients with a financial interest in the case.
“The only thing I want to tell you all is the bankruptcy process itself is extremely fragile,” Jones said in court. “If I can’t trust the professionals that appear before me, the process won’t work.”
Judge’s Signature
Jones and Freeman were partners at Texas law firm Porter Hedges, where their romantic relationship blossomed. After Jones became a judge in 2011, Freeman joined him as his court clerk, taking a significant pay cut.
Freeman left the clerk job in 2018 to work as a bankruptcy partner at Jackson Walker.
As Jones’s caseload swelled with Kirkland bankruptcy cases, the judge’s signature routinely appeared on court orders granting Jackson Walker fees, including for Freeman’s work.
Over the years, Kirkland lawyers talked with each other and people outside the firm about romantic ties between Jones and Freeman, and people familiar with the conversations said,
Jones first encountered Van Deelen during the 2020 bankruptcy hearings for McDermott International, an offshore oil-and-gas engineering company. Kirkland represented McDermott, and Jackson Walker was co-counsel.
Van Deelen, an investor in the company, accused McDermott’s management of fraud. His frequent outbursts in court irritated Jones, who later dismissed Van Deelen’s claims.
After a hearing in March 2020, Jones said he overheard Van Deelen call him a “son of a bitch,” which Van Deelen denied, according to court papers. Kirkland lawyers said they also heard the remark. After that, Jones banned Van Deelen from the courtroom unless a security officer accompanied him. Jones also referred him to federal prosecutors for possible investigation.
Van Deelen filed a motion in July 2020 to remove Jones from the case, alleging the judge made a false accusation and was biased against him.
In March 2021, an envelope with no return address arrived in Van Deelen’s mailbox. The unsigned letter inside had a title: Corruption Involving Judge David R. Jones.
In interviews, Freeman told Jackson Walker’s bosses that her relationship with Jones had ended by around March 2020. In August 2021, the firm prepared a memo saying so.
Court records show that Jones never recused himself from overseeing cases that Freeman worked on, as required by federal law.
In February 2022, Jackson Walker was told by the friend of a firm partner that the Freeman-Jones relationship wasn’t over. Freeman acknowledged to the firm that she and Jones had rekindled their romance but denied they lived together. Freeman hired her own attorney, who suggested Jackson Walker disclose “a close personal relationship” between Freeman and Jones, according to court papers.
Jackson Walker declined to make any disclosure. The firm said in court papers that it told Freeman around June 2022 that her exit from the firm was the only path forward.
Around October 2022, Jones asked Matthew Cavenaugh, a colleague of Freeman’s at Jackson Walker, to come to his court chambers. Jones told Cavenaugh that his relationship with Freeman was casual “and no different from encounters with many other lawyers at many other firms,” according to court papers filed by Jackson Walker.
Jones gave Cavenaugh a proposed disclosure for Jackson Walker to use in bankruptcy filings. It said Jones and Freeman had “a close personal relationship,” according to court papers. Jones told Cavenaugh that Jackson Walker “needs to make this happen,” the court papers said.
Freeman continued to work on mediations conducted by Jones on behalf of Kirkland clients. In December 2022, she left Jackson Walker to start her own law office.
A Kirkland representative later said Jackson Walker never revealed why Freeman left Jackson Walker or told Kirkland that Freeman and Jones had a romantic relationship.
Confession
In January 2023, U.S. District Judge Andrew Hanen refused Van Deelen’s appeal to remove Jones from the McDermott case. Hanen ruled that Van Deelen’s “general accusation of corruption,” based on the letter, wasn’t supported by facts.
That same month, Jones mediated talks among stakeholders in the bankruptcy case of GWG, an alternative asset-management firm. To one party, Jones suggested three candidates for the job of liquidating trustee. Freeman was on the list.
When other lawyers in the case also suggested Freeman, Jones said she would be a good choice, according to people familiar with the matter. GWG and its stakeholders went along. In April 2023, Jones signed an agreement for the company to hire Freeman at $700 an hour.
Even though Freeman had failed to tell Jackson Walker the truth about her relationship with Jones, she remained in good standing with the firm.
In March 2023, Jackson Walker told a prospective client, pharmaceutical developer Sorrento Therapeutics, that the firm “strongly recommends the engagement of the Law Office of Liz Freeman” to help identify and address potential conflicts of interest in the company’s bankruptcy case. She later appeared in billing records for work in the case, which was heard in Jones’s court.
Months later, Van Deelen found the evidence he wanted on a website that searches public records for personal information. “All I had for proof was that anonymous letter,” he said. “Then I asked TruthFinder.” He learned from property records on the Harris County website that Jones and Freeman had bought a home together in Houston in 2017 and still owned it.
Armed with that information, Van Deelen filed a lawsuit against Jones in October. This time, he included the property records with the anonymous letter. Jones confirmed the relationship in an interview with The Wall Street Journal shortly after.
The Fifth Circuit Court of Appeals was alerted and initiated an investigation against Jones. After a little more than a week, the court’s chief judge said she found probable cause that Jones had committed misconduct regarding his intimate relationship with Freeman. Jones resigned days later.
A Kirkland representative said the firm and its lawyers didn’t know Jones had a relationship with Freeman until it became public last October.
Following Jones’s departure, a civil division of the Justice Department filed a series of motions challenging roughly $13 million in fees that Jackson Walker had billed and which were approved by Jones. That included more than $1 million billed by Freeman in 17 cases, court filings show. When Jones approved Freeman’s fees, she paid property taxes on the house they owned together.
The Justice Department said the bankruptcy system was “significantly compromised” by the Jones-Freeman relationship in at least 26 Chapter 11 cases involving Jackson Walker. Kirkland was co-counsel in most of those cases.
The code of conduct for federal judges requires that judges disqualify themselves in any proceeding in which their “impartiality might reasonably be questioned,” including if a spouse or intimate partner is advising one of the parties.
A Jackson Walker representative said the firm acted appropriately once it learned of the relationship between Jones and Freeman.
Kirkland said in court papers that its actions were appropriate. The firm maintained that it wasn’t legally obligated to disclose allegations about an unverified romantic relationship.
In court filings, Jones, 62, said that he was legally immune from civil claims over his past actions on the bench. Freeman, 51, said in court filings that she had no legal duty to disclose her relationship with Jones.
In court, a Texas-based federal judicial official questioned Isgur, Jones’s colleague. Isgur said he had no clue about Jones’s relationship with Freeman. According to someone familiar with the conversation, Isgur said Jones typically didn’t invite him into his house when he picked him up or dropped him off because Jones had an aggressive dog.
On June 6, Van Deelen got his day in court.
Lawyers for Jones, Freeman, Kirkland, and Jackson Walker appeared at a hearing at the federal courthouse in Del Rio, Texas. They were called to address Van Deelen’s allegations that Kirkland and Jackson Walker knew about the Jones-Freeman relationship and conspired with Jones to get favorable rulings.
Jones, now a former judge, sat in the back of the courtroom.
U.S. District Judge Alia Moses wanted to know why the law firms didn’t seek to verify or debunk the anonymous letter that exposed the conflict of interest.
“Why did no one look into it?” Moses asked. “Everyone is coming into court with not-so-clean hands.”
Moses asked a lawyer representing Kirkland why the firm, out of due diligence, didn’t investigate whether its co-counsel had a conflict in cases before Jones. The lawyer responded that the letter was unsubstantiated at the time.
“Kirkland was, at worst, a bystander here,” he said.
Moses will decide whether Van Deelen’s case can move forward.
