Sandstone, a Brooklyn-based legal AI startup, has secured $10 million in seed funding led by Sequoia Capital to transform how in-house legal teams handle contracts and legal work. Founded in August by former McKinsey consultant Nick Fleisher and technology lawyer Jarryd Strydom, the company is targeting corporate legal departments rather than traditional law firms—a strategic pivot based on Fleisher’s experience helping elite law firms adopt AI tools.
During his time at McKinsey, Fleisher witnessed firsthand the resistance from Big Law to AI adoption, describing implementation efforts as “like pulling teeth.” Law firms face a fundamental conflict: AI tools that increase efficiency could reduce billable hours, creating misaligned incentives. This experience led Fleisher to identify a more receptive market: in-house legal teams increasingly receiving mandates from CEOs and boards to adopt AI, even before clear ROI metrics exist.
Sandstone’s platform uses AI to help corporate lawyers draft and review contracts based on historical company data and past agreements. The system integrates with existing tools like Slack, email, and Salesforce, allowing non-lawyers to submit contracts for AI-powered review before routing to appropriate legal staff. The platform analyzes contracts against company precedents, house style, and relevant business context to flag risks and suggest edits—positioning itself as the “core operating system” for in-house legal teams.
The funding round included participation from Kearny Jackson, SV Angel, the Chainsmokers’ Mantis VC, Daybreak Ventures, and general counsels from companies including eBay and Bilt. Sandstone already has several dozen paying customers, primarily midsize companies with multiple in-house lawyers, with significant representation from software, manufacturing, finance, logistics, and insurance sectors.
Sequoia partner Bogomil Balkansky, who led the investment, noted that “AI is transforming human labor into software,” with the legal industry particularly ripe for disruption given the more than one million lawyers in the US who rank among companies’ most expensive hires. The investment comes amid surging interest in legal tech, with sector funding nearly doubling from $2.2 billion in 2024 to $4 billion in 2025, according to Crunchbase data.
Key Quotes
It was like pulling teeth
Nick Fleisher describing his experience at McKinsey helping elite law firms implement AI and tech tools, highlighting the resistance from lawyers whose billable hour model creates misaligned incentives for efficiency gains.
There’s no platform that in-house lawyers think of as their core operating system. We can be that home.
Fleisher explaining Sandstone’s positioning as a comprehensive system of record for corporate legal teams, rather than just another point solution for specific legal tasks.
AI is transforming human labor into software
Sequoia Capital partner Bogomil Balkansky explaining the firm’s investment thesis, noting that the legal industry with over a million highly-paid professionals in the US is especially ripe for AI-driven transformation.
Increasingly, general counsels told me they had a mandate from the CEO or board to adopt AI — even before there was clarity on how it would affect costs or head count.
Fleisher describing the shift he observed during his final months at McKinsey, where AI adoption became a strategic imperative driven from the top rather than a bottom-up efficiency initiative.
Our Take
Sandstone’s success in attracting Sequoia backing reveals a fundamental truth about AI adoption: incentive alignment matters more than technology capability. Big Law’s resistance isn’t about technological sophistication—it’s about business model preservation. In-house teams, conversely, are rewarded for speed and efficiency, making them natural AI adopters.
The timing is particularly noteworthy. With legal tech funding doubling and C-suite mandates accelerating AI adoption, we’re witnessing the professionalization of legal AI beyond experimental deployments. Sandstone’s integration approach—pulling context from Slack, Salesforce, and email—suggests the winning legal AI platforms won’t be standalone tools but connective tissue that makes existing workflows smarter.
Sequoia’s willingness to back multiple legal AI companies (Harvey, Crosby, Sandstone) signals confidence in a multi-winner market large enough to support specialized players. This could accelerate innovation as competition intensifies for the corporate legal dollar.
Why This Matters
This funding represents a significant validation of AI’s potential to transform corporate legal operations at a time when in-house teams face mounting pressure to do more with less. Unlike law firms whose business models create perverse incentives against efficiency, corporate legal departments are measured by how quickly they enable business operations—making them ideal candidates for AI adoption.
The story highlights a critical inflection point in legal AI: the shift from top-down technology mandates to practical implementation. General counsels are increasingly receiving directives from CEOs and boards to adopt AI before having clarity on cost savings or headcount implications, suggesting AI adoption has become a strategic imperative rather than an optional efficiency play.
Sandstone’s approach—building a unified operating system for legal work rather than point solutions—could establish new standards for how corporate legal teams function. With legal tech funding doubling and major players like Harvey, Clio, and now Sandstone competing for market share, the legal profession faces unprecedented technological disruption that could fundamentally reshape how legal services are delivered and valued across the economy.
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Source: https://www.businessinsider.com/sandstone-raises-seed-funding-sequoia-legal-ai-2026-1