For the last year, Jackson Walker has faced litigation — and presumably a hit to its bankruptcy business and reputation — since the revelation that a Houston bankruptcy partner was romantically involved with a federal bankruptcy judge who presided over many of the firm's bankruptcy cases.

With litigation pending — including an effort by the U.S. Trustee for the Southern District of Texas seeking fee forfeiture or sanctions in dozens of bankruptcy cases — the firm has commented little on the situation outside of court documents.

That strategy, however, puts a crimp on what the firm, an Am Law 200 firm that is the largest Texas-only firm, can do to deflect blows to its reputation. Marketing and firm consultants said one strategy to quell damage in a crisis situation is transparency.

However, because of so many "moving parts," it's not surprising the firm is "erring on the side of less is more," said Elizabeth Lampert, president of Elizabeth Lampert PR, based in San Francisco.

"In these very, very high–profile situations, you want, in Crisis 101, [to] be transparent," she said. "But, you also need to protect the entire partnership."

In a statement provided on Thursday, Jackson Walker managing partner Wade Cooper said, "The firm has taken this matter very seriously and we are confident that in the end it will be determined that we acted appropriately given what we knew and when we knew it. As for our finances, Jackson Walker is on track to have a record-breaking year."

Deborah McMurray, founder, CEO and strategy architect of Content Pilot in Dallas, said she cannot say if the bankruptcy matter has harmed Jackson Walker's business, but the classic reputational management approach is to be transparent and avoid revealing things in stages.

"Otherwise, the story keeps continuing. There is a tendency of losing control and it starts gaining momentum in ways that are sometimes unpredictable," McMurray said.

Gina Rubel, chief executive officer and general counsel of Furia Rubel Communications, said that because of the legal matters, the firm "needs to focus on the court of law and not the court of public opinion for the short term."

There are many "great" attorneys at Jackson Walker, and the firm and all of the attorneys should not take the fall for decisions of a few, she said.

"That's part of the problem. As firms get really big, when there's reputational damage, it affects everyone within that house, so it's important that based on the investigations and the findings, if there are individuals who made a decision that was not in the firm's best interest, they take ownership of the decision," she said.

Jackson Walker's bankruptcy problem came to the surface last fall, when the news of the romantic relationship between former partner Elizabeth Freeman and former U.S. Bankruptcy Judge David Jones became public. Jones resigned from the bench in October 2023, and the U.S. Trustee began filing motionsseeking to vacate orders awarding the firm millions of dollars in fees and expenses in dozens of bankruptcy cases the firm worked on in Jones' court.

Those motions are pending, and Jackson Walker opposes the effort. In responses filed in a number of the bankruptcies in which the U.S. Trustee is seeking fee forfeiture or sanctions, Jackson Walker alleges the motions are "factually and legally flawed," and asks a judge to decline to grant the request.

Meanwhile, in late September, U.S. Bankruptcy Judge Marvin Isgur of the Southern District of Texas concluded that Jackson Walker breached ethical standards after the Am Law 200 firm learned of the romantic relationship between Freeman and Jones.

In a five-page letter sent on Sept. 20 to Chief Judge Randy Crane, Isgur said the firm breached ethics to clients, to court duties, and to opposing parties and counsel by failing to disclose the romantic relationship. Isgur wrote that he made the referral after reviewing facts as pled by Jackson Walker in the proceedings filed by the U.S. Trustee.

Tim Corcoran, of Virginia-based Corcoran Consulting, said the situation Jackson Walker faces is unique, but not so different from what happens when a firm is challenged by a partner who engaged in misconduct or was accused of malpractice.

"The entire firm and its reputation is impacted by the actions, or alleged actions of a few, so it has to proceed in a way that allows the adjudication process to take place, but also ensuring that the firm and its brand remain intact," he said. "The first thing, naturally, is to protect the firm's brand."

The bankruptcy scandal has disrupted Jackson Walker's working relationship with Kirkland & Ellis on bankruptcy matters. For several years, Jackson Walker served as local counsel on a number of bankruptcies Kirkland filed in the Southern District of Texas. However, according to bankruptcy court records compiled by BankruptcyData.com, Kirkland has not filed any Chapter 11s in Houston since news about the relationship between Freeman and Jones became public. In 2024, Jackson Walker filed one Chapter 11 in the Western District and is local counsel for the Official Committee of Unsecured Creditors on another bankruptcy filed in the Southern District, according to the data.

That is in contrast, for instance, to the first half of 2023, when Kirkland filed nine Chapter 11s in Houston during the first half of 2023 with more than $50 million in assets or liabilities, and all had Jackson Walker as co-counsel to the debtors.

After a string of years when Jackson Walker posted record revenue, the firm posted less impressive results for 2023, when revenue improved by 3.8%, but with substantial lawyer and equity partner head count growth, revenue per lawyer slipped by 4.2% and profits per equity partner dropped by 9.1% as transactions and real estate work slowed.

Any impact on the firm's business stemming from the bankruptcy scandal may show up in the firm's 2024 financials. The firm, with more than 500 lawyers, lists 21 lawyers in its bankruptcy, restructuring and recovery practice.

To prevent harm to the firm's business, lawyers should be communicating with clients about how it is handling the bankruptcy practice issues, said Roger Hayse, director and co-founder of Hayse LLC in Austin.

"The most obvious thing is anytime you have sort of critical developments, you want to make sure you are in contact with your key clients and reassuring them the firm is stable and happy to continue to serve and be able to answer questions," he said.

Nancy Rapoport, a University of Las Vegas Distinguished Professor at the William S. Boyd School of Law, who has followed the Jackson Walker situation closely, said assessing the impact of the issue depends on whether it's a look at just the bankruptcy practice or the firm as a whole.

"It's really hard to tease out. Certainly it hasn't helped their firm's reputation any, but I don't know if it has slowed down business," said Rapoport, a former dean of the University of Houston Law Center.

In a lengthy law review article published this year in the Emory Bankruptcy Developments Issue, Rapoport concluded that Jones should have recused himself from cases involving Freeman, Freeman should have disclosed the relationship and should not have appeared in cases assigned to Jones, and Jackson Walker should have disclosed the relationship once it became aware of it.

She said in an interview that she has a "lot of respect for a lot of lawyers at Jackson Walker," and "this is a tragedy all the way around."