Legal Consultant Limelight: Matt Blumenstein

In another life, Matt Blumenstein would be a trial lawyer at a boutique firm or managing litigation as in-house corporate counsel.

Which demonstrates that he has no regrets about choosing litigation as a career. It was his preoccupation with helping his clients obtain justice, in fact, that convinced the Stanford philosophy major to trade the courtroom for legal finance.

A relatively nascent industry in the United States, litigation finance provides funding for both individuals and companies that have strong claims for damages but may lack the cash to bankroll qualified lawyers through often-lengthy buildups to trial, followed by possible appeals.

“Whereas well-capitalized defendants used to have an advantage in litigation by virtue of their ability to outspend plaintiffs on lawyers and litigation expenses, we level the playing field and ensure cases are decided on the merits, not on the size of the parties’ bank accounts,” says Blumenstein, who joined Chicago-based Statera Capital in 2020 after 10 years at Williams & Connolly in Washington, D.C.

Founded in 2018, Statera specializes in commercial disputes needing investments of $500,000 to $3 million, though it has the resources to provide more, depending on the strength of the case.

“Statera’s flexibility allows it to be a solution for cases involving a wider array of commercial law firms,” Blumenstein says. “To date, Statera has financed cases involving law firms ranging from the largest AmLaw 100 firms to newly formed litigation boutiques.”

Lawdragon: Litigation finance has grown tremendously in the United States, but it’s still a relative newcomer to the legal market here. How did you become interested in it?

Matt Blumenstein: As a practicing litigator, I became increasingly aware of this emerging field, and it struck me as an interesting and valuable innovation. And I was intrigued by the prospect of using my knowledge and experience in litigation to evaluate cases as potential investments.

LD: What aspects do you find particularly satisfying professionally?

MB: I get great satisfaction from interacting with both our corporate counterparties and their lawyers. With respect to our counterparties, I enjoy learning about their meritorious claims and helping to provide for top-tier representation to maximize the likelihood of a fair result. With respect to the lawyers with whom we collaborate, as a former litigator myself, I enjoy getting to know excellent litigators across the country — ranging from famous Am Law 100 partners to entrepreneurial solo practitioners.      

LD: Out of all the work you’ve done in your career, what would you say is the most interesting matter you’ve worked on for a legal client?

MB: I defended a client at trial who was charged with first-degree murder and conspiracy to commit first-degree murder.

LD: What trends are you seeing in litigation finance?

MB: One trend we are seeing — and expect to see more of — is the use of litigation finance in the bankruptcy context. Bankrupt companies often have meritorious claims, but the trustee or debtor-in-possession typically doesn’t have the money to pay lawyers to prosecute them. We can provide funding to recover on those meritorious claims, and thereby increase the size of the estate for distribution to creditors.

LD: Can you describe a recent matter that you’ve handled?

MB: We recently partnered with a trustee of a bankrupt entity who needed funding to pursue claims against former insiders who effectively had embezzled the insolvent company’s remaining assets. The trustee is a seasoned pro and a great collaborator. The lawyers are from an elite litigation boutique that we love working with. We gave them the funding they needed, and the insiders quickly buckled.

LD: What were the key challenges of successfully handling this matter for your client or with successfully launching the new product or service?

MB: A key challenge in that matter —and every matter we do — was to learn the case quickly and close the funding deal as expeditiously and efficiently as possible, while minimizing the burden on the counterparty and its lawyers. That means efficiently processing extensive factual and legal information and quickly but carefully analyzing the embedded risks. In the case I just mentioned, the factual background was extensive (and extremely colorful). And there were some difficult legal issues to analyze. Nonetheless, we moved quickly and efficiently in a user-friendly manner, and the result vindicated our underwriting.

LD: What’s the impact of enabling businesses that lack the funding to pursue valid legal claims to go forward with them?

MB: Statera’s funding enables companies with meritorious claims to obtain just results with the best lawyers for their cases.

LD: What do you find most memorable about your work in litigation finance so far?

MB: What are most memorable to me are the emails we’ve received from counterparties after their cases have resolved successfully, where they thank us for enabling them to obtain justice that otherwise would have been unavailable due to a lack of financial resources.

LD: You mentioned working as a litigator before you moved into finance. Tell me more about your career path.

MB: After law school I clerked for Judge Karen LeCraft Henderson on the U.S. Court of Appeals for the D.C. Circuit, where we reviewed all manner of civil and criminal cases. I then practiced at the law firm of Williams & Connolly for 10 years. I was a generalist; I practiced across a wide array of jurisdictions, causes of action and business contexts. I believe those experiences made me well-suited for my current job analyzing and evaluating a broad range of commercial litigation.

LD: Did any experience from your undergraduate or graduate work push you towards this type of career?

MB: At Stanford, I focused on ethics, especially the ethical theories underpinning modern systems of justice. That experience confirmed for me that I wanted to be a lawyer, because the premises and implications of the civil and criminal justice systems in this country are profoundly important in peoples’ lives. I received a J.D. from Vanderbilt University Law School. I focused my advanced studies on complex civil litigation, and I won an award for “extraordinary achievement in the study of litigation and dispute resolution.” Those studies launched me to my clerkship on the D.C. Circuit and practice at Williams & Connolly. Further, they introduced me to some of the concepts and dynamics underlying American civil litigation that are integral to litigation finance.

LD: Is this the type of job you imagined yourself having as a younger person or student? If not, what did you expect to be doing by this point of your career?

MB: When I was a student, commercial litigation finance had not taken hold in the United States, so I never imagined having this job. I expected to be a practicing litigator throughout my career.

LD: Was there a course, professor or experience that was particularly memorable or important in how your career turned out?

MB: My mentor in law school was Professor Richard Nagareda. He was a brilliant, ground-breaking scholar on the subject of civil litigation. He was also a generous and captivating human being. Tragically, he passed away shortly after I graduated. I often think of him, the lessons I learned from him, and what his reaction would be to my entering the field of litigation finance. I tend to think he’d be delighted.

LD: What advice do you have now for current students or young professionals who wish to have a similar type of career?

MB: I don’t think it’s possible to do my job — or any similar job in the field of litigation finance — without significant experience practicing litigation. My advice, therefore, would be to get a broad range of experience litigating after law school, while continuously educating yourself about the field and networking with professionals who work in it.

LD: How has your profession changed since the early part of your career?

MB: My profession didn’t really exist in the early part of my career — at least not in the United States. It is fun and exciting to be on the vanguard of a new industry that is rapidly evolving and maturing.

LD: What advice would you give potential clients in terms of how to most productively work with an outside advisor?

MB: As in litigation generally, I think a key piece of advice is to address the weaknesses of a case head-on, and not try to minimize or run away from them. It’s not realistic or prudent to assume that the weaknesses won’t come to the fore, and you gain credibility by flagging them and explaining your strategy for overcoming them.

LD: What are some of the innovations that Statera is bring to the field of litigation finance?

MB: Statera is uniquely organized and structured to best serve a wider range of clients and financing needs in a more mature commercial litigation middle market. Our innovations to benefit clients include:

• Flexible Investment Size: Most existing funders focus on financing cases that require at least $3 million in investment. Those cases typically require much higher damages thresholds and reside in a small subset of U.S. commercial law firms. Statera was created to offer greater flexibility on investment size and structure, with a focus on investments below others’ minimums, but also with the flexibility to finance larger needs. As demand for litigation finance continues to increase, Statera’s innovative offering brings the solution to a broader universe of clients and law firms and, therein, creates greater access to justice.
• Streamlined Approval: Statera is a nimble, flat organization. Clients and law firms engage directly with the investment committee from the initial discussions through closing. There are no convoluted approval processes or opaque hierarchies to navigate.
• Speed to Execution: Statera’s focus on mid-sized commercial cases requires us to employ an efficient diligence process to close transactions quickly, reliably, and cost-effectively. Statera accomplishes this by engaging collectively from the outset, conducting nearly all diligence in-house, and employing a straight-forward transaction process.
• Innovative Deal Structures: Our team’s experience structuring deals in and outside of the litigation finance industry and our flexibility on investment size allows Statera an unparalleled ability to structure bespoke transactions that best meet a client’s needs.

LD: What are some current challenges in your leadership role? Can you share some strategic plans for your firm in the coming months or years?

MB: The most challenging aspect of my role is making decisions and taking risks in the face of inevitable uncertainty. Litigation is inherently unpredictable, at least to a certain extent. And it is not possible to have comprehensive, exhaustive information about a dispute ex ante. Therefore, we need to make investment decisions with incomplete information, based on our best forecasting efforts and risk tolerances.

LD: What do you do for fun when you’re outside the office?

MB: My wife and I see as much live music as we can, typically indie rock bands. I also like to play and watch sports with friends. And nothing is more fun than horsing around with my three-year-old daughter.

LD: Are you involved in any community or public interest activities? Please tell us what you find meaningful about your time serving them.

MB: Before moving to Chicago, I lived in Washington, D.C., and I still am on the board of a non-profit there that provides health care to low-income residents and housing to families experiencing homelessness. I find it meaningful because I don’t believe that health outcomes should depend on one’s income, and I don’t think any child should have to worry about having a safe and supportive place to live.

LD: Do you have a favorite book or movie about the law?

MB: “The Story of My Life,” by Clarence Darrow.

LD: If you weren’t in your current job, what would you be doing now?

MB: I probably would be a trial lawyer at a boutique in Chicago or managing litigation in-house.