MS. BERNSTEIN SHARES WITH US HER IN-DEPTH EXPERIENCE WITH LITIGATION FINANCE, AND HOW COVID-19 HAS AFFECTED HER JOB.
One of the more noteworthy developments over the past few years in the litigation arena has been the rise of litigation funding. A newer name in the industry is Curiam Capital LLC, launched in 2018 by Owen L. Cyrulnik and J. Ross Wallin, which, as of late 2019, has approximately $800 million in capital under its management.1
Amongst Curiam’s team is Lauren Bernstein, an exciting hire who joined as a director in March 2019. She has over a decade of experience as a finance lawyer representing institutional lenders and borrowers in commercial financing transactions. Before joining Curiam, Lauren was a counsel in the corporate finance department of Arnold & Porter Kaye Scholer LLP, where she practiced for more than ten years and specialized in debt finance transactions and restructurings. Lauren also founded and led Kidz Central Station, a NYC-based technology startup company, and worked in-house at Sandler O’Neill + Partners, L.P., a full-service investment banking firm and broker-dealer focused on the financial services sector.
Lauren graduated cum laude from Cornell University, where she was elected to Phi Beta Kappa and received a B.A. with Distinction in all Subject Matters. Lauren received her law degree cum laude from New York University School of Law.
I recently interviewed Lauren, and we discussed her career, litigation finance, and how COVID-19 has affected her job:
Back in 2014, you took a risk, leaving a flourishing career at a leading law firm to start your own company. Are you glad you made the career change?
I am so glad that I took a risk and started a company, Kidz Central Station, to solve a problem that was personal to me – making the process of finding and bookings kids activities as easy as finding and booking restaurants and hotels. It is very easy to continue practicing law and doing the same thing year after year. It was much harder to get out of my comfort zone and learn new skills and work with a more diverse group of people than lawyers.
Nonetheless, what do you miss about practicing law in a firm?
Leaving Arnold & Porter Kaye Scholer made me realize that working in a law firm had many benefits that I took for granted, ranging from the intelligence, talent, and work ethic of lawyers at the firm to the resources of the firm and being part of a large and cohesive group.
What skills from your law firm years have carried over into your current work in litigation finance?
Being a team player, developing an interest in areas that I did not specialize in and having the desire to always learn more and better myself. As the sole corporate lawyer by training at Curiam, I am always learning about the litigation process as well as various types of litigation including some I had never heard of – e.g., qui tam lawsuits brought under the False Claims Act. I think my passion for what I do comes in part from the excitement of learning new things at this stage in my legal career. I also like that I can bring a different perspective to the table since I come from a background of working to make a deal rather than litigating.
As a result of COVID-19, millions of people, including you, are currently working from home. What are your tips for effectively working, as well as running cases, from home?
It is definitely a hard balance working at home, but knowing that everyone else working on our cases is under the same constraints makes it more manageable. The transition has actually been better than expected. Having a routine and sticking to it is helpful. We have regularly scheduled team calls as well as calls with our law firms and claimants. For me, working with people from all over the country and world and sharing our experiences strengthens our working relationships and makes getting through these times a little easier.
Many law firms (including Robins Kaplan LLP) have created resource centers to help clients and contacts navigate the legal and business considerations of COVID-19. What specifically do you want (and not want) from outside counsel during these times?
I find such resources to be very helpful. There are many legal issues arising from COVID-19 and having trusted lawyers who can provide concise information in areas in which they have an expertise is important. Specifically, guidance regarding force majeure clauses, business interruption insurance claims, corporate fraud, and other areas where we expect to see an increase in litigation is valuable. There is, however, a lot of information out there from many different sources so being able to rely on and reference COVID-19 information from a few law firms helps me manage my time more effectively.
Litigation finance has quickly become a very important part of the legal environment and is poised to become even more important as a result of the current COVID-19-related recession. Why has funding taken off so significantly? What do you think the biggest opportunities in the space are right now?
There are many benefits of litigation funding to both claimants as well as law firms. To highlight a few: freeing up capital that would otherwise be used by a claimant for legal expenses, to pay operating costs or allow for investment in its business; allowing claimants to hire the best possible lawyers for the case, including law firms that otherwise would have been unwilling to accept a fully contingent fee; providing an additional independent evaluation of the case; and reducing the risk of a negative outcome in the litigation. I think there are many opportunities, especially now because of COVID-19 and the changes in the economy. For instance, there are existing claims where the claimant may now be unable to pay legal fees or would prefer to conserve its cash. There will also be (and has already been) a lot of litigation driven by COVID-19, particularly in insurance recovery and commercial litigation where a party is unable to meet its obligations because of the pandemic.
What challenges has COVID-19 created in your specific area of work?
Other than the challenges of working remotely, I think Curiam, and other funds, will see an overall increase in new potential funding opportunities. Some of these new opportunities, however, will be of lower quality than others, so the challenge will be to analyze the new opportunities efficiently and find the strongest cases.
What types of cases is your firm most interested in and why?
We are interested in high-value litigation with strong law firms acting for the claimant (as I am sure all funders are). The type of cases can be of any commercial nature, including breach of contract, antitrust, patent, insolvency claims, false claims act, and international arbitrations. We also do portfolio financings where law firms bundle multiple cases into a single financing agreement. The cases in the portfolio are typically cross-collateralized so that our return is based on the performance of the portfolio in the aggregate. We require at least $3 million as the minimum investment for portfolio fundings and the portfolio must have at least three cases. For our single-case investments, the investment must be large enough to justify our work to evaluate the claim. We target investments of $1 million for single-case investments and there is no upper limit on the size of an investment that we will consider. It is important that potential damages be high enough to make the investment profitable for both the claimant and Curiam as we do not want to invest in a case unless the claimant stands to benefit after taking into account the cost of our financing.
Law firms are using litigation funding to be more competitive. What do you look for from law firms when assisting your clients to find counsel?
When seeking counsel for a potential investment, we look for a lead lawyer at a law firm that has a proven track record with the same type of claims and a firm with the resources to handle the litigation. Similarly, we only fund investments where we are comfortable that the law firm handling the litigation has a team devoted to the case with expertise in the area and a lead lawyer with whom we expect the claimant to have a good and comfortable working relationship.
Conversely, when assessing cases, what do you expect from your prospective client’s counsel in terms of their exposure to the risk in a case?
We are flexible as we want an arrangement that works for the claimant, law firm, and Curiam. Generally in our single-case investments we look for the law firm to discount their standard rates somewhat in exchange for a modest success fee should the litigation prove successful. This arrangement gives the law firm the potential to recover more than 100% of its standard rates without having to take on significant risk for that potential upside.
There are those who say that litigation finance should be regulated in some way. Some have called for requirements for any funding to be disclosed and judicially approved. What is your opinion on such proposed regulations?
I do not see why funding should be judicially approved. The New York City Bar Association has a working group that studied this issue (among others) and recently came out with some conclusions and recommendations. The group said that there generally should not be mandatory disclosures of funding arrangements. Funders do not have control over litigation and I do not see why a funding agreement should be disclosed, but not a bank—loan the proceeds of which are used to pay a claimant’s legal fees.
Despite an increased emphasis on diversity and inclusion within the legal field in recent years, the legal profession remains one of the least diverse of any profession. Women, for example, are significantly underrepresented at the senior-most ranks of law firms and earn less than their male peers. What are your thoughts on the disparity in the industry?
Maybe after the pandemic men will have a greater appreciation of the challenges that many women lawyers face as a result of demanding workloads and raising a family. It often seems that females sacrifice their careers for family reasons. Perhaps having us all work remotely will result in some greater equality. As we have seen over the last several weeks of the pandemic, work can be done from home.
If you could, what advice would you give to your younger-self when you were just beginning your legal career? What advice that you actually got from others do you wish your younger-self took at the start of your legal career?
I think having a mentor at a law firm who you can speak to candidly and who looks out for you is invaluable. It is very important to find that person and develop that relationship (as opposed to keeping an assigned mentor that you may not feel is the best fit). Maintaining relationships is also key. If someone leaves your firm, stay in touch as having a network is helpful at all stages of your career.
Balancing a career and a family can be challenging, especially when you and your children are working and “going-to-school” in the same Manhattan apartment, and the legal field is certainly not known for being the most compatible with family life. How have you managed to balance being a successful professional and mother, particularly during these times?
Having a routine and schedule and trying to stick to it is the first step. Also trying to see the positives of the situation is helpful. We all do our work and take it seriously yet we can usually have all of our meals together. This is something that we never were able to do pre-COVID-19. I also try to share at a basic level what I do with my kids and have them do simple math that is related to what I am working on. For instance, I asked my son if he hypothetically could obtain money from someone to help pay his lawyer in a lawsuit and he won, then how much money should he keep compared to the person who helped pay the cost of the lawyer. I think sharing what we do professionally is helpful to both me and my family. Of course, my kids’ stepdad works at TikTok so I always lose when it comes to talking about work.
Finally, what are you currently reading or watching during the free time that you do have?
Ha! Free time? I think pre-pandemic many of us would have said if we were home 24/7, we would find time to tackle our reading lists or binge watch TV shows. But that has yet to happen for me.
1 See Charles Agee & Gretchen Lowe, Westfleet Advisors Litigation Finance Buyer’s Guide, Westfleet Advisors, Nov. 19, 2019.