This AI-native law firm is building a dream team of ex-Big Law lawyers

Most legal AI companies focus on selling software to law firms. New York-based Norm Ai has taken a different approach, embedding legal knowhow into AI agents that power its affiliated AI-native law firm, Norm Law, which has been aggressively recruiting senior lawyers from Big Law.

Founded just three years ago by chief executive John Nay, Norm Ai is now valued at $1.2 billion after raising a $120 million in a Series C round led by Khosla Ventures, the first institutional investor in Open AI.

The round also included participation from Blackstone, Bain Capital Ventures, Vanguard and financial services giant TIAA, which also acquired a previous company founded by Nay, an AI-powered investment platform.

How it differs

Unlike most legal AI companies, which sell software to law firms, Norm Ai primarily sells its technology to financial institutions and other highly regulated industries, helping them manage legal and regulatory compliance.

Norm Law calls itself the world’s first AI-native full-service law firm. Under its model, AI agents complete much of the underlying work with senior lawyers supervising and refining the output.

The firm says it prices matters based on outcomes rather than hourly billing under what it calls a “client-aligned incentive structure” as opposed to model providers and traditional law firms whose economics are tied to token usage or hours billed.

Investment structure

Norm's model is also notable because US ethics rules generally prohibit non-lawyers from owning law firms, making it challenging for legal practices to raise external investment.

Norm’s solution is to separate the technology business from the law firm. Investors back Norm Ai, while Norm Law operates as a separate lawyer-owned legal practice licensing the AI technology. The structure allows the business to attract outside capital while keeping the practice of law within existing US professional conduct rules.

Big Law recruits

The latest funding - the company has raised more than $260 million since it was founded in 2023 - comes as Norm Law continues to recruit senior lawyers from Big Law to build out practices across areas including funds, private equity and real estate.

This week, the firm announced the appointment of John Budetti as partner and co-head of global private capital funds. He previously was a long-time investment funds partner at Kirkland.

The appointment follows a series of high-profile hires this year, including former Sidley Austin executive committee chair Mike Schmidtberger, who joined as chairman, former Ropes & Gray private equity partner Bill Mone, and emerging companies lawyers Sam Lipson from Pillsbury and Justin Rattigan from the venture capital arm of Bain Capital, who previously practiced together at Cooley.

A growing trend

Norm Law is part of a small but growing group of startups using AI to rethink the delivery of legal services and abandon the billable hour.

In the UK, Garfield AI launched as an AI-powered law firm focused on helping consumers and small businesses recover unpaid debts.

At the other end of the market, US-based Moritz, founded by Oxford- and Harvard-trained lawyers, is positioning itself as an AI-native alternative to Big Law firms and recently raised $9 million.

Like Norm, Moritz delivers legal services using AI-supported workflows and charges fixed fees rather than by the hour.