Crosby: The "Neofirm" Revolutionizing Contract Review

New York-based startup Crosby is fundamentally changing legal service delivery by eliminating the traditional billable hour model. Cofounded in September 2024 by CEO Ryan Daniels and John Sarihan, Crosby functions as a "neofirm" where AI agents and human lawyers collaborate.

The firm services approximately 100 companies, including AI startups like Cursor and Runway, utilizing its technology to expedite contract reviews for documents such as NDAs and services agreements. Crosby has seen significant growth, reporting a 400% revenue increase since October after reviewing 13,000 contracts to date.

Ditching the Hourly Grind for Speed and Alignment

CEO Ryan Daniels, a lawyer with over a decade of in-house counsel experience at AI startups, views this shift as the most significant change for lawyers in a century. Traditional hourly billing, which Daniels calls "taxing," is replaced by a fixed fee structure, typically ranging from $250 to $1,000 per contract, based on page count ($10 to $50 per page).

This model aligns the firm's financial incentives directly with client goals: closing deals faster. Unlike traditional firms, Crosby bills only once, even if a contract requires multiple reviews.

How Crosby's AI-Human Collaboration Works

Crosby's differentiation lies in its speed, achieved through a sophisticated, automated workflow. Clients submit contracts via Slack or email, where they are uploaded to a central system named Bailiff, along with relevant templates and guidelines.

The Role of AI Agents

A suite of eight AI agents, built upon models from OpenAI, Anthropic, and Gemini, then begins the review process. Each agent is assigned a specific task, such as extracting context from prior agreements or suggesting specific textual revisions.

Once the AI completes its end-to-end review, it assigns a confidence score and passes the document to a human lawyer for final verification and handling of complex legal nuances. This entire process often takes only a few hours, a stark contrast to the days or weeks required by conventional methods.

Training and Continuous Improvement

The AI agents are continuously honed through a built-in feedback loop. They are trained on thousands of anonymized contract reviews and 50,000 clauses meticulously hand-labeled by Crosby’s in-house legal team. This process refines the "art of lawyering" within the AI system.

Client Success and Market Validation

For fast-moving AI companies, Crosby's speed is essential. AI coding startup Cursor, for example, has used Crosby to review 2,000 contracts, achieving a 50 percent reduction in review time.

Weiser, a lawyer who joined Crosby after working at Sullivan & Cromwell, noted the frustration of traditional firms using unhelpful chatbots while needing to bill hours. He states Crosby offers "by far the fastest turnaround, most conducive to the pace of our business relative to anything else we have tried." Lainie Yallen of Simile echoed this sentiment, citing the need for a legal team that can keep pace with their 28x revenue growth.

Funding and Competitive Landscape

Crosby recently announced a $60 million Series B funding round, co-led by Index Ventures and Lux Capital, valuing the firm at $400 million. The investment validates the thesis of targeting the massive global legal services market, projected to reach $1.1 trillion by 2026.

The firm faces competition from other AI legal tech companies like Lawhive and Ivo, as well as potential tools from major labs like Anthropic's Claude plugin. However, Daniels emphasizes that Crosby is a registered law firm, meaning it assumes liability for every contract reviewed—a risk he believes frontier AI labs are unwilling to take.

The Future of Legal Practice

Daniels argues that traditional firms prioritize "profits-per-partner" over reinvestment in R&D, as their model relies heavily on human capital. While big law firms are adopting AI for competitive advantage, Harvard Law School's Robert J. Couture suggests the billable hour will persist for complex work at large firms.

Couture maintains that clients require confidence in human accountability: "I still want to rely on humans that I know and have trust and confidence in." Looking ahead, Crosby’s technology could eventually enable "multi-party autonomous negotiations," though for now, human lawyers remain ultimately responsible for the final output.