A New York startup has raised $85 million to make the case that the billable hour is on the way out. Crosby is an AI‑first law firm that combines licensed lawyers with AI agents to review contracts, charging a fixed price per document instead of by the hour. Their median turnaround time is 58 minutes. Their clients include some of the fastest‑growing companies in tech, like Cursor and Ramp, and AI startups such as Cognition.
I’m in the professional services industry, and three years ago, I saw the curtain coming down on how I ran my business. But this story from New York shines a light on how the legal industry will be disrupted by AI.
What Crosby actually does
Crosby is not a legal‑tech vendor selling software to traditional firms. It is a registered law firm, with malpractice insurance, that has rebuilt how legal work gets done from the ground up.
Here is how it works. A client sends a contract over Slack or email. An AI system triages the document, works out what type of agreement it is, pulls in context from previous work with that client, and produces a first‑pass review with proposed redlines and explanations. A human lawyer then spends their time on the pieces that need judgment: risk calls, non‑standard clauses, and the places AI cannot reliably assess what’s acceptable.
The client gets back a marked‑up contract, typically in under an hour, plus a commentary table and a drafted response they can send straight to the other side.
CEO Ryan Daniels, a Stanford‑trained lawyer and former associate at Cooley, describes Crosby as a new kind of firm built around AI. His argument is straightforward: if AI can handle most of the mechanical contract review in minutes, charging by the hour no longer makes sense. The incentive should be speed and quality of outcome, not time spent.
The commercial traction backs this up. Crosby came out of stealth in 2025 and was soon processing around 1,000 contracts every three weeks, with a median turnaround of 58 minutes. By early 2026, the firm says it has reviewed more than 13,000 contracts and helped negotiate over 1 billion dollars in contract value, up from about 30 million less than a year earlier. It has raised about 85 million dollars across three funding rounds led or backed by Sequoia, Index Ventures, Lux Capital, and Bain Capital Ventures – and even Cooley, the Big Law firm where Daniels started his career, has invested.
Why is the billable hour under pressure
Crosby is not operating in isolation. The billable hour, the dominant pricing model in law for decades, is facing a structural challenge.
The 2026 State of the US Legal Market report from Thomson Reuters and Georgetown notes that profits per lawyer at the largest American firms have risen by roughly 54% since 2019, even as total demand and hours have been far more modest. Firms are earning more not because lawyers are working longer hours dramatically, but because they’ve pushed rates up. At the same time, Thomson Reuters’ Legal Tracker data shows that about 90% of all law‑firm revenue still comes from standard hourly billing arrangements. That gap between rising prices and relatively flat productivity is exactly where AI creates pressure.
The same report warns that generative AI will compress tasks that used to take hours down to minutes and will intensify client pushback on pure time‑based pricing. Surveys of law‑firm leaders now show growing expectations that AI will drive more alternative fee arrangements and non‑hourly billing over the next few years.
Big firms are already experimenting. Cleary Gottlieb and others have launched separate units or partnerships to offer AI‑assisted contract review at significantly lower cost than traditional associate work, precisely because clients are questioning why they should pay by the hour for what increasingly looks like workflow plus software.
The legal market is worth hundreds of billions of dollars globally, and that underlying tension – between time‑based pricing and AI‑accelerated delivery – is not going away.
Beyond law, across professional services
This is the pattern I want you to pay attention to. Any professional service built on selling time faces the same pressure.
Consulting. Accounting. Communications. If the core deliverable can be partially automated – and in many cases it can – then charging purely by the hour starts to penalise efficiency instead of rewarding it. The firms that figure out outcome‑based pricing, combined with AI‑augmented delivery, will pull ahead.
Crosby’s model is instructive. They did not just add AI into an existing partnership; they built a new kind of firm around what AI makes possible. Engineers and lawyers sit side by side. Every contract review feeds a data flywheel that improves the system for the next one. The AI learns each client’s playbook – their preferred clauses, risk tolerance, and negotiation patterns – over time.
That is not just a technology story. It is an organisational design story.
My take
Here is what I keep coming back to. Crosby went from about 30 million dollars in negotiated contract value to more than 1 billion in under a year, while holding their median turnaround to under an hour. They did not do that by replacing lawyers. They did it by restructuring how lawyers and AI work together, and by aligning their pricing with what clients actually value: speed and outcomes, not hours logged.
If you work in any professional services environment, ask yourself this. Are you still pricing your work based on time? Or are you pricing it based on what you deliver? Because your clients are about to start asking that question, whether you are ready or not.
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Sources
Forbes, “Why This AI Law Firm Is Ditching the Billable Hour” (31 March 2026): forbes.com
Upstarts Media, “Crosby, ‘AI Law Firm’ Working With Startups Like Cursor, Raises $20 Million” (8 October 2025): upstartsmedia.com
Law.com, “Legal Contracting Startup Crosby Secures $60M in Series B Round” (31 March 2026): law.com
Global Legal Post, “Cooley-backed contract review start-up Crosby raises $60m” (1 April 2026): globallegalpost.com
Sequoia Capital, “Partnering with Crosby: A Law Firm at the Speed of AI” (June 2025): sequoiacap.com
Bain Capital Ventures, “Crosby Redefines Legal Work with AI Contract Automation” (October 2025): baincapitalventures.com
Index Ventures, “Contracts at the Speed of Business” (October 2025): indexventures.com
Above the Law, “AI Is Killing The Billable Hour” (January 2026): abovethelaw.com
Key Statistics
Crosby median contract turnaround: 58 minutes
13,000+ contracts reviewed since launch
$1 billion+ in negotiated contract value
$85.8 million total funding across 3 rounds in under 12 months
Clients include Cursor, Ramp, Cognition, Runway, Clay
Top US law firm profits per lawyer up 54% since 2019 (Thomson Reuters/Georgetown 2026)
40% of law firms expect AI to increase non-hourly billing (Thomson Reuters 2025)
Global legal industry worth approximately $300 billion
About the Podcast Host
AI and Communications Specialist | Author | Podcaster | International Speaker
Joanne Sweeney is a recognised leader in digital marketing and digital transformation, specialising in the practical application of AI to enhance communication strategies. The founder of Digital Training Institute, Joanne, empowers leaders and communications professionals to leverage AI responsibly and effectively, ensuring transparency, trust, and tangible results.
She completed the Harvard Kennedy School Executive Programme in AI and Public Policy this summer before launching her fourth book AI Playbook, in September. Joanne has also published two editions of Public Sector Marketing Pro, which were preceded by her first title, Social Media Under Investigation Law Enforcement and the Social Web.
Her books have become go-to resources for governments, public sector and policing agencies, as well as marketing and communications professionals, all navigating the challenges of the changing Internet.
Joanne is the host of the AI SIX Podcast, a daily six-minute podcast that provides actionable insights, expert interviews, and practical advice to help professionals navigate the new world of work.
