Sequoia-Backed Crosby Launches AI-Powered Law Firm to Revolutionize Contract Review for Startups
Sequoia-backed Crosby launches a new kind of AI-powered law firm, marking a significant shift in the legal industry. Crosby is more than just a provider of AI software for lawyers; it is a fully operational law firm that leverages AI to deliver legal services, particularly contract reviews, at unprecedented speeds. Founded by Ryan Daniels, who previously served as general counsel for multiple startups, and John Sarihan, an early employee at Ramp, Crosby emerged from stealth mode with a $5.8 million seed round led by Sequoia. The firm's unique approach involves employing both lawyers and software engineers to create and use its proprietary AI technology, aiming to streamline legal processes and reduce the time traditionally spent on contract negotiations. Daniels, whose legal career spanned from working at Cooley to advising startups, noted that contract reviews and negotiations often bottlenecked business growth. At his last company, which grew from 10 to 100 employees, he found that a significant portion of his time was devoted to reviewing and negotiating contracts, master service agreements (MSAs), and other legal documents. This experience highlighted the inefficiencies and delays inherent in traditional legal practices, prompting him to seek a better solution. Sarihan, bringing his tech expertise from Ramp, spearheaded the development of Crosby's AI software, which, with human oversight, can review a new client contract in under an hour. The goal is to further optimize this process, potentially reducing the review time to mere minutes. Crosby's team currently consists of 19 professionals, combining the talents of experienced lawyers and skilled software engineers. Since its soft launch in January, Crosby has reviewed over 1,000 contracts for fast-growing startups such as Cursor, Clay, and UnifyGTM. These contracts range from MSAs to data processing agreements and non-disclosure agreements (NDAs). By leveraging AI, Crosby aims to cut the typically lengthy and tedious contract negotiation process, which can take weeks or months, down to a fraction of that time. Sequoia's investment in Crosby was driven by the firm's belief in the potential of AI to revolutionize legal services. Josephine Chen, who led the seed round, was familiar with Sarihan from his time at Ramp and had previously met Daniels through Venue, an AI procurement startup Sequoia had backed and that was later acquired by Ramp. When Chen discussed the concept with Sequoia's in-house lawyer, Cindy Lee, she found that Daniels was known for his expertise from his time at Cooley. Chen emphasized that Sequoia's decision to invest was heavily influenced by the strength and experience of the founding team, noting that 70% of their seed investment criteria focus on the team. The legal industry, with its $300 billion market size, presents a ripe opportunity for disruption, especially in areas where efficiency can be dramatically improved, such as contract negotiations. According to Chen, even within Sequoia's portfolio companies, the legal process has been a significant hurdle. "Legal is a bull’s-eye case for the use of LLMs [large language models]," she said, highlighting the potential of artificial intelligence to address pressing issues in the legal field. Industry insiders are optimistic about Crosby's potential impact. The combination of AI and human legal expertise could not only accelerate contract reviews but also standardize and improve the quality of legal documentation. This innovative model may set a new standard for legal efficiency, allowing startups and businesses to focus more on growth and less on legal bottlenecks. Crosby's success so far suggests that the future of legal services could indeed be transformed by AI. With the backing of investors like Sequoia and a proven track record of rapid contract reviews, the firm is well-positioned to reshape the legal landscape. As the legal industry continues to evolve, Crosby exemplifies how technology can be harnessed to enhance both the speed and accuracy of legal services. In summary, Crosby's AI-powered law firm represents a game-changing approach to legal services, addressing a significant pain point for startups and businesses. The support of top-tier investors like Sequoia and the firm's early success indicate a promising future for AI in the legal industry.