The tech industry has said a lot about how AI can transform jobs. Legal startup Crosby, who just came out of stealth with a $5.8 million seed round led by Sequoia, is perhaps the most extreme example of what we’ve seen so far.
Crosby doesn’t just make AI software for lawyers, but it does. Crosby is a real law firm that uses AI to provide legal services at an unprecedented speed.
Rather than selling the technology to lawyers, Crosby hired lawyers who used internally developed AI software. We mainly sell contract review legal services to startups. The company currently promises that AI software, along with human supervision, will be able to confirm new client contracts within an hour. And according to co-founder CTO John Sarihan, who spoke with TechCrunch, he probably hopes to drop it even faster.
Crosby co-founder and CEO Ryan Daniels is the lawyer himself and the son of two law professors. He cut his teeth with Cooley, one of the biggest companies in the tech industry. He then spent most of the decade working as a legal counsel for a startup.
“My last company, when I was the only corporation, grew from about 10 to 100. I found out that most of the time I was spending legally it was because of our contracts, sales contracts and MSAS,” Daniels mentioned some of the customer contracts known as the Master Services contracts.
Contract negotiations and legal review were the bottlenecks of the company and “why it wasn’t growing as fast as we wanted.”
Today, contract negotiations remain a human-to-human process and can take weeks or months.
While there are more AI tools to help lawyers speed up some of their work, the founder of Crosby said the only way to actually change the legal industry with AI is “building their own law firm to own the entire process, end-to-end,” Daniels said.
A first employee of Lamp, Sarihan aimed to hire software engineers from the startup world, and Daniels began hiring lawyers. Today, the startup employs around 19 people, including founders.
“The innovation here is in the technology and people,” Salihan said.
The company soft launches in January, the co-founder said, and has already reviewed more than 1,000 customer contracts, including MSAs, data processing agreements and private contracts for rapidly growing startups like CARSOR, Sales Automation Startups Clay and UnifyGTM.
Sequoia’s Josephine Chen and Alfred Lin led the seeds alongside Bain Capital Venture, along with many angels, including Lamp co-founder Eric Griman and Karim Atier, Opendor co-founder Eric Wu, Casetext co-founder Jake Heleer, Instacart co-founder Max Malun and The Flat Will Well Well Well Well Well Well Well Well Well Well, along with the Bain Capital Ventures. shklarski.
The stars were lined up to Crosby to land Sequoia as an investor. Chen knew Sarihan from the lamp. She previously met him through the venue’s co-founder, an AI procurement startup she supported.
When the co-founders pitched their ideas to Chen, she asked Sequoia’s in-house lawyer about the idea, and that lawyer, Cindy Lee, had known Daniels since her days at Cooley.
“When we think about seed investment, for us, it’s probably 70% around the team, 30% in the market, market dynamics, the insights that founders have there,” explained Chen. Given all the connections she already had with the founding team, and that legal work is a $300 billion industry, Chen was down to confuse it with Crosby.
“We have seen how we negotiate contracts, even in our own portfolios, become bottlenecks for growth,” Chen said. In her view, the legal is “a bull’s eye case for using LLMS.”