The insight is simple and clear; fast-moving companies need access to the right legal contracts, agreements and documents in a hurry.
Spotting this need as a challenge to design a new kind of law firm that is able to move as fast as Silicon Valley, co-founders Ryan Daniels and John Sarihan created Crosby, a hybrid AI law firm based in New York City that has now raised $5.8m in a seed funding round led by Sequoia Capital.
At the heart of it, Crosby is a hybrid law firm that operationally combines the skills of talented lawyers with gifted engineers that is purpose-built to offer the best legal guidance at lightning-fast response times.
Rather than trying to plug-in AI workflow solutions onto an existing law firm or trying to develop a standalone software solution, Crosby has been designed to produce trustworthy legal outcomes – particularly focused on contracts - by leveraging talented lawyers working in tandem with agentic AI technology.
The Crosby strategy
As reported by StartupHub: ‘Crosby’s core philosophy hinges on the belief that the most effective way to automate human negotiations, especially for contracts like leases, offer letters, and business agreements, is by deeply integrating AI within the operational structure of a law firm itself. This model allows for an unparalleled synergy between legal expertise and technological innovation.
A central tenet of Crosby’s strategy is the creation of unique feedback loops, a distinct advantage over traditional legal software providers. John elaborates: “having your domain experts sit side-by-side with your engineers creates such a unique feedback loop, where it’s more than just evals, it’s actually using the product, experiencing it, doing user research, and understanding what are the critical workflows, what are the biggest gaps.” This direct, iterative collaboration allows for rapid product improvement and a deeper understanding of real-world legal challenges.’
Deal volume rather than billable hours
Rather than billing clients by the hour, Crosby charges clients by the document and achieves contract turnaround times under an hour. They are able to predictably achieve this by using probability frameworks to accurately determine how long a piece of legal work is estimated to take.
The incentive for Crosby is to try to maximise volume and deal velocity, which aligns well with what their clients value – affordability, predictability and the speeding up of negotiations.
Using AI to predict contract negotiation bottlenecks
With a laser-focus on efficiency the firm uses AI to predict which terms are critical to negotiate and which can be conceded, thereby reducing the number of back-and-forth exchanges required to close a deal. According to the founders; ‘a thoughtful AI-generated explanation for a change can significantly reduce back-and-forth negotiations between parties.
Crosby’s vision of the future of law?
In an interview recorded by Sequoia Capital, Crosby’s founders share their perspective on how technology will change the legal profession in the future:
- Automating the Underserved Market: The most significant impact of legal automation will occur not in corporate law, but in the "huge tail" of legal services for individuals (e.g., leases, child support). This market is currently "horribly underserved," and AI will enable "net new market creation" because "the alternative is nothing."
- The "Golden Age" for Lawyers: AI will provide immense leverage, transforming the legal profession. A lawyer's output could increase from reviewing two contracts an hour to 500. According to them ‘the most prized skill will be the ability to harness AI effectively’.
- The Future of Negotiation: The ultimate goal is to enable a system where agents, armed with each party's preferences and risk tolerances, can simulate negotiations. This would produce an auditable record of the negotiation and transform an adversarial process into a collaborative one aimed at finding agreement faster.
- Advice to Law Students: "Question everything," including the dogma of legal education, but balance it with an appreciation for the field's foundational brilliance. The most critical future skill to develop is learning how to prompt and leverage AI.
The way that legal services get delivered is changing rapidly. Innovation is serving as a powerful catalyst to help in-house legal teams and law firms completely reimagine how they might offer value in the future.
These are exciting and creative times and no doubt a lot of new legal ventures like Crosby will emerge as a result.