Blue Ocean Global Technology Interviews Jonathan Carson | Co-CEO at Stretto, Former Bankruptcy Attorney and Entrepreneur

Jonathan Carson is a dynamic, engaging bankruptcy expert bringing insight and enthusiasm to his commentary on current bankruptcy news and developments. He draws upon his experience as a former bankruptcy attorney and his award-winning entrepreneurial career focused on improving the bankruptcy process for professionals, companies, and individuals. Jonathan currently serves as co-CEO at Stretto, a market-leading legal services and technology firm that provides a full spectrum of case management and claims administration services, depository and distribution solutions, and technology tools to legal and financial professionals. Stretto manages some of the country’s largest corporate restructurings and provides proprietary software used to prepare more than 80% of the consumer bankruptcy cases filed nationwide. He is a guest lecturer at the University of Michigan Law School, as well as the University of Texas at Austin, and is frequently called upon by the media to share his entrepreneurial and bankruptcy expertise.

Blue Ocean: Can you walk us through your professional journey in the bankruptcy, restructuring, and legal technology industries? What initially inspired you to pursue this path, and what continues to drive your passion today?

Jonathan: I was a forever-want-to-be-a-lawyer type of kid. I grew up wanting to be a courtroom lawyer, litigating in front of people, and I went to law school and took a course in bankruptcy. There, I realized there was a way to practice law in the corporate space without sacrificing the courtroom because bankruptcy is a motion trial, a motion-practice type of law, as we call it.

So I pursued the bankruptcy path and went to work for a bankruptcy judge for two years to really hone my expertise in the very specific pieces of our bankruptcy system. After that, I left and went to work in the world of big law and joined Kirkland and Ellis, a very large law firm, as a corporate restructuring attorney.

After a couple of years at the law firm, I realized that I loved the bankruptcy game, but I didn’t love the practice of law. And I left the practice of law with another attorney to establish a legal services and technology company to help streamline the corporate bankruptcy process and bring efficiency, cost-effectiveness, and organizational structure to the bankruptcy system. So I left the high-paying job and took a risk and founded a business called Kurtzman Carson Consultants, or KCC. Eric Kurtzman was my co-founder.

We opened our own version of a startup, which meant bringing our dogs to work and bringing in lunch for the whole staff on a regular basis. It was a work-hard, play-hard environment. We grew a business and market share rapidly, ultimately with 300 or 400 employees, and became the market leader in the corporate bankruptcy technology space, supporting very large businesses as they navigated the Chapter 11 process. Washington Mutual, Circuit City, Blockbuster, and half of the automotive industry were among our clients back in the mid-2000s.

We then sold that business to a very large public company from Australia, Computer Share, in 2009. They wanted exposure to the bankruptcy market, and they saw us as an interesting acquisition target. We ran it for a few years, and ultimately, we exited. Then we spent a few years kind pursuing other entrepreneurial ventures.

After three years, we decided to pursue a shared vision from the early years of our first business when we were introduced to another business that was intriguing to us. It was the market share leader in the consumer bankruptcy technology world. In our American bankruptcy system, we have basically two types. We have the consumer bankruptcy system, where Mary Smith, who has a job that pays her $40,000 a year with no health insurance, has a heart attack and she can’t afford to pay her medical bills, would file for bankruptcy to resolve her debt. The other side of bankruptcy is where the very large billion-dollar company that needs to reorganize its business files for Chapter 11.

Fast-forwarding to 2017, Eric and I joined forces with a very large private equity firm to acquire a large technology business in the consumer bankruptcy space called Bankruptcy Management Solutions, or BMS. And we have spent the last eight years growing that business. We’ve made several acquisitions and also rebuilt our first business. And today, we are the largest legal services and technology business that serves the bankruptcy and insolvency industry nationwide in America. 

I’ve been a passionate bankruptcy geek for 30 years. Our system is the best system of its kind in the world. And it’s amazing to be at the forefront of it.

Blue Ocean: What does a typical day look like for you as co-CEO of Stretto, balancing leadership, growth strategy, and innovation within the legal and technology services space?

Jonathan: As a CEO, there is no such thing as a typical day. When you add into the mix a happy marriage and three growing kids, there’s especially no such thing as a typical day. But I would say in our CEO roles, Eric and I look at different parts of the business more intently than others.

For me, I’m about 80% outward-facing and 20% inward-facing. And Eric’s probably the exact opposite. So if you think about that, 80% of my time is spent on external issues, such as market, client, and industry issues, sales and marketing, public relations, and media.

So my day could involve a strategy session on business development in a particular part of the professional services industry. It could be a marketing strategy session on how we introduce enterprise AI into big law or big consulting. It could be a media interview. It could be a one-on-one with one of the business development team members helping him or her strategize how they’re going to get more involved in a certain firm and bring in more business from a certain part of the market. Or it could be, like it oftentimes is, a cross-country airplane flight to New York to go spend a couple of days and do a dozen meetings and come home exhausted as I do once a month.

Blue Ocean: Which emerging trends in bankruptcy or legal technology are you most excited about right now?

Jonathan: Undoubtedly, the most exciting trend in the legal technology world is artificial intelligence. Nobody quite knows how the story gets told the rest of the way. There’s so much activity. There are large enterprise solutions that are trying to be everything to big law, such as Harvey or Legoro. And there are other platforms, such as Stretto’s, that are purpose-built, aiming to provide solutions to specific parts of the legal system, like corporate restructuring and bankruptcy.

Large institutions are going to have to plug into foundational knowledge bases like Stretto’s for bankruptcy when it comes to accessing information related to a certain project or work task, and those who get there first will have a significant advantage. We’ve done a tremendous amount of work in building our own AI capabilities. We’ve also made an acquisition to bring in-house the largest amount of bankruptcy and insolvency-specific data and documents, and together created an AI-powered research platform  that will make professionals’ lives much more efficient as we go forward. 

That will bring about all sorts of opportunities for large professional service firms as they figure out how to compete in a changing market.

Blue Ocean: Can you share a particularly challenging matter or business situation you’ve faced and explain your strategy for navigating it successfully?

Jonathan: We’ve been on an eight-year mission to take the market leadership position in one of the sub-disciplines of the bankruptcy industry and use it as a platform to create a business that serves the full spectrum of bankruptcy and insolvency needs.

The first business we grew was just in one part of the system: corporate bankruptcy. The bankruptcy industry is cyclical, and therefore the business will fluctuate as the market does. As an entrepreneur, you need to solve that problem.

If you can diversify the revenue base and operate across multiple parts of any system, you can now flatten it out. And we’ve done that by growing the largest business operating across the entire bankruptcy system. We’ve got a software business that serves the consumer bankruptcy market, a trustee service line, and a deposit management business as well as a corporate restructuring business, which allows us to scale and grow each of those into mature market players and then also make investments to figure out where to grow from there.

It took the effort of tackling the entire industry to realize that was the right play in terms of bringing stability, consistency, synergy, and visibility into our particular corner of the legal system.

Blue Ocean: How do you and your executive team continue to stay ahead in the highly competitive legal and technology sectors?

Jonathan: It requires team dynamics and keeping it together, while staying informed and moving forward at the right pace. 

Eric and I do that in different ways. We have a C-suite call every Monday morning; we get on the phone, the nine of us, and talk about what’s happening in the week, what happened last week, and what we have to be focused on as we go forward.

Twice a year, we do a C-suite retreat where we get together for a couple of days and do focused meetings on strategy and tactics. We do company-wide town halls every month, and group department summits. 

So it’s about keeping all the groups in the know and rowing together in the same direction, hopefully at a similar speed, to bring us to that place where we’re getting the most out of the team. We spend a lot of time, what we call working on the business, not just in the business.

Blue Ocean: What core values or leadership principles do you believe every great professional should uphold?

Jonathan: The legal and financial world includes a wide range of professionals. Those industries start and stop with integrity, with honesty and ethics, with a strong moral compass, with hard work and dedication, and with focused and committed advocacy for the client.

And that’s very important when you play the role of a professional. Someone is trusting you to use your judgment, your expertise, and your experience to guide them; they are the client, and that’s where your loyalty lies.

Blue Ocean: What are some common misconceptions people have about the bankruptcy and restructuring industry, particularly from the perspective of legal and technology services?

Jonathan: In the bankruptcy space, there remains a bit of a stigma attached to what happens if one has to go through the process. But our system is about the opportunity to find a fresh start, whether you’re a business, an individual, or a city. And there are a lot of positive outcomes that come with that, even though it will involve sacrifice and compromise along the way. 

Blue Ocean: What distinct value do you believe you bring to clients and organizations?

Jonathan: When it comes to Stretto, the value we bring to our clients and various participants in our respective channels is state-of-the-art technology, best-in-class client service, and expertise that comes with multiple decades as experts in the bankruptcy space. Our team has a tremendous amount of time and years in our particular core industry. And that is a unique value-add to a client going through bankruptcy.

For me, in terms of our business, I’m providing my highest level of value when I’m focused on strategy and tactics that relate to outside-facing initiatives. Whether it’s marketing, business development, public relations, or media relations, those are areas where I tend to have a lot of background and experience and can bring that to various opportunities and challenges that we face as a business, and that is the best use of my time and energy.

Blue Ocean: The restructuring and bankruptcy field can involve high-pressure and emotionally sensitive situations. How do you maintain resilience and focus while leading through challenging circumstances?

Jonathan: You have to have a strong team around you, and you have to really understand situations and be intentional in how you approach them. There are certainly stressful situations in any business. We see stressful situations facing our clients as they go through challenging circumstances. We’ve faced challenges and opportunities, but when you have a strong and smart team around you, and you can trust in their expertise, then you can slow down and act with intentionality. Usually, you can navigate those tough waters.

Blue Ocean: What advice would you offer to aspiring professionals interested in careers involving restructuring, legal services, entrepreneurship, or legal technology innovation?

Jonathan: The corporate restructuring space is going to be a very busy market for the next handful of years. So whether you’re in consulting or investment banking or law, if you’re just starting, this is a space worth taking a look at, especially if you’re interested in the intersection of management, finance, and law.

On the legal and professional side, the imperative to be AI-native in your thinking cannot be understated. You need to be working and living your life natively in AI if you are coming up in the entry ranks of our space. You just have no choice. You need to be well-versed and fluent in all the various tools available to do the job you’re looking to go out and do, knowing that the job you’re going to do probably won’t be here for a long time because they’ll find ways for technology to manage it. If you can remain at the front of that wave, you will have a tremendous opportunity set in front of you. If you fall behind, it will be hard to catch up.

Blue Ocean: Is there a guiding philosophy, principle, or quote that has significantly influenced your career, leadership style, and approach to business?

Jonathan: There are so many different things that have influenced my leadership over the years. Young Presidents’ Organization (YPO) stands out because it is so multifaceted through the forum process and through education.

One of the guiding principles Eric and I adopted very early on in our entrepreneurial journey was the concept of creating systems in your business. There was a well-known small business consultant who wrote a book called The E-Myth. It focused on why many businesses fail in the first few years and how to prevent that from happening. One of the great strategies of business building in the last hundred years has been the successful building of systems.

The prototypical example is Polly, who runs “Polly’s Pies”. She makes the pies that come from her grandmother’s recipes, but she also does the QuickBooks, and also sweeps the floor, and also enters into the marketing deals. And the idea is: how do you create systems in the business to allow for things to happen so you, as the leader or the entrepreneur, can focus on the areas where you really have the highest and best use?

In the legal and financial professional world in particular, this concept is super interesting because you think about lawyers or investment bankers, and a lawyer might say, “I get it, it sounds great, but I can’t clone myself. I can’t make a second version of myself. How do I create a system?” And the answer is, no, you can’t. So, on the delivery side of the expertise, that has to be you.

But who runs your conflict checks? Who creates your invoices? Who gets your office space? Who hires and trains your talent? How do you create systems around your practice that enable you to do what you do so well? There are opportunities for lawyers and for professionals in other parts of our system to think more about, again, working on the business and creating systems inside of it to allow it to scale to the appropriate place and to allow it to achieve its full potential.

Conclusion

Jonathan’s journey illustrates the power of innovation, adaptability, and forward-thinking leadership. His career reflects a lifelong commitment to streamlining corporate processes, leveraging advanced technology, and advocating for organizational efficiency. Throughout decades of work as a corporate restructuring attorney and a legal tech entrepreneur, one lesson remained consistent: building structured systems and purpose-built solutions matters because it empowers professionals to transcend day-to-day administrative burdens and focus on where they can deliver their highest and best value.