The Victors

Norm Ai Builds Backing From Clients Big Law Can’t Afford to Lose

Giant asset managers that lined up to invest in Norm Ai are also giving it legal work. Will it be enough to put a dent in Big Law's market share?
August 24, 2026, 4:30 AM

By Roy Strom and Eric Killelea

Samir Kaul is fed up with high legal fees. The managing director of Silicon Valley’s Khosla Ventures says he has been pushing back on lawyer bills.

In one instance, Kaul told a private equity firm investing in one of his portfolio companies that he only refused one term in its proposed agreement: the budget for $1.5 million in legal fees. The total should be a tenth of that amount, Kaul recalls saying.

When Kaul started in venture capital in the early 2000s, an early round investment term sheet known as a Series A cost $25,000. Now, he said, it’s $200,000.

“It should cost me $1,000,” he said. “It should be, like, a couple hours of an agent’s time.”

An agent, not a lawyer, Kaul said.

Major investors and asset managers like Khosla have powered the dramatic growth of traditional law firms for the past decade or more. They are the types of clients Big Law can’t afford to lose. Now, they have a new way to push back on legal bills: AI will do the work.

Some are taking that thesis one step further, placing bets on companies that will use artificial intelligence to redesign legal services and farming out certain work to them. The financial incentive to work with those companies makes this round of buzzy law firm startups different than previous versions that fizzled out.

Even if Big Law firms aren’t yet losing significant work to the new entrants—and it’s far from certain that they will—law firm partners have noticed the funding and attention being heaped on their would-be disruptors. That’s forcing some firms to adapt and shaping a nascent competition between traditional firms and those dubbed “AI native.”
1 World Trade Center
1 World Trade CenterSpencer Platt/Getty Images

One startup represents the dynamic more clearly than others: Norm Ai, a New York-based tech company that’s raised $260 million from Khosla, Blackstone Inc., Bain Capital, and others. It was valued at $1.2 billion in July. Those investors are already clients of Norm and its law firm, Norm Law.

“My guys love them,” said Kaul, who has used Norm for work on fund formations, closing simple venture transactions and forming special purpose vehicles for follow-on investments.

Norm got its start concentrating on a narrow band of compliance and transaction work that is well-suited to automation and little threat to Big Law firms’ bottom lines. While Norm has a head start on building processes for repeatable tasks, some large corporate firms are racing to automate their own competitive edge: years of experience handling high stakes matters for top clients.

“The real test, for Norm and the rest of the field, is whether and how that extends into the messier, judgment-heavy parts of practice,” said Matt Souza, co-founder of rival AI-native firm, Talairis Law Group. “That’s an open question.”
‘Early Innings’

On two floors of Manhattan’s 1 World Trade Center, roughly 50 Norm lawyers are developing AI agents.

The attorneys mostly are Big Law refugees whose resumes include stints at firms such as Cravath Swaine & Moore, Skadden Arps Slate Meagher & Flom, and Paul, Weiss, Rifkind, Wharton & Garrison. The systems they’re designing are meant to streamline a never-ending flow of compliance work, unsexy tasks similar to copy-editing for highly regulated clients.

“In a traditional law firm, they’re back office, and here they’re front office,” Norm Ai founder John Nay said of the lawyers.
John Nay
John NayPhoto courtesy of Norm Ai

Nay never worked at a law firm. He’s an artificial intelligence researcher who last year sold the investment platform he developed to Nuveen Asset Management for nine figures.

Norm’s genesis came in a 2022 academic paper in which Nay warned against trying to train AI on ethics. He argued instead that encoding the law into AI is the best way to align it with democratically accepted values.

The paper also briefly mentioned that if AI understood the law it could help improve the practice of law. Nay launched Norm Ai in 2023 to test the thesis.

The company exited stealth mode the next year, announcing it had raised $11.1 million to help make life easier for compliance chiefs. That’s a far cry from competing with the world’s largest law firms, where annual revenue stretches into the billions.

Big Law ears pricked up when Blackstone poured $50 million into Norm in November. That’s when Norm launched its law firm, noting that Blackstone was partnering to “shape and develop” Norm Law’s services.

Blackstone has paid Kirkland & Ellis, on average, about $70 million in annual legal fees for the last five years. Lawyers from Kirkland and Simpson Thacher & Barlett have helped the asset manager put billions to work investing in the AI infrastructure buildout this year alone. Kirkland and Simpson Thacher did not respond to a request for comment.

Nay said on a podcast this month that Norm is doing legal work that a Big Law firm that serves Blackstone would normally do. But he clarified he isn’t using AI agents for “bet-the-company stuff"—legal industry lingo for the hard-to-tackle problems that justify hefty prices.

Blackstone said publicly in May that Norm Law’s work for the firm on an investment matter was handled faster and cheaper than its traditional processes.

In an interview, Kurt Chauviere, who leads Blackstone’s legal AI efforts, said that was referring to the first matter Norm Law handled for Blackstone. Norm has since handled more work, and Blackstone is seeing “real” savings compared to traditional providers, though the company declined to specify those savings.

“We anticipate there will be increased competition among legal service providers,” Chauviere said.

John Finley, Blackstone’s chief legal officer, said: “Given we’re in early innings, Blackstone’s work with Norm has not yet had any material impact on our use of outside law firms.”
Entering the Zeitgeist

Norm Law’s January hire of Michael Schmidtberger, the former executive committee chair of Sidley Austin, added an imprimatur of prestige that is still vital in legal business.

The law firm side of the business is doing work that is “human dependent” and would otherwise be done by top firms, said Schmidtberger. An AI agent will do the first pass, followed by Norm Law’s human attorneys.
Michael Schmidtberger
Michael SchmidtbergerPhoto courtesy of Norm Ai

Schmidtberger, a securities and corporate transactions veteran, left Sidley after hitting the firm’s retirement age for leadership positions. Norm Law also has ties to another ex-Big Law leader. Jeff Hammes, who built Kirkland into a private equity behemoth and the country’s largest firm, is a Norm investor.

Norm Law’s partner roster now totals 18 lawyers. They work side-by-side with software and legal engineers. The goal is to bake the partners’ knowledge into repeatable AI workflows meant to handle increasingly complex matters.

A Norm spokesperson declined to provide revenue figures and did not respond to a question about how the AI and law firm operations split the pot. Khosla led Norm’s latest funding round, which raised $120 million in July.

Bloomberg Law asked Norm Law for names of clients that use its services. A company spokesperson provided four—Blackstone, Coatue Management, Bain Capital, and Khosla Ventures—all of which have invested in the company.
‘Not All Firms Are Going to Make It’

Private equity firms have come under pressure in recent years as they’ve struggled to sell portfolio companies and return money to investors. That has made them more willing to push back on legal fees as a way to save money, one lawyer with a long track record in the industry said, speaking on background to preserve relationships.

Those clients now see AI as part of that effort. One Norm customer said they have saved between 20% and 70% on fees compared to a traditional provider, though they declined to be named speaking about specifics of their arrangement.

“What they are saying is that you guys won’t do this yourself, and you’re not willing to see the writing on the wall, so we’re going to make it very clear to you,” the lawyer said. “It’s going to be interesting to see who will be at the forefront of sticking up to law firms.”

Norm’s investors speak about it in a way that sounds like talking their own book, but also signals frustration with the status quo.

“The investment management ecosystem has needed a law firm built for the benefit of its clients,” Matt Harris, a partner at Bain Capital, said in a May release announcing Norm’s launch of an emerging companies and venture capital practice.

It begs the question: For whose benefit are traditional law firms built?

Harris, in an interview, said he works with firms such as Ropes & Gray and Kirkland that have been “wildly client-centric.” He recalled having just started at Bain in the 1990s, when he placed a call late on a Sunday night to former Ropes chair Brad Malt. Harris felt guilty (he said the experience drove him to leave Bain for a period), but Malt happily spent 45 minutes with him on the phone.

Bain will maintain its relationships with critical law firms “forever,” he said, though he hopes they “take inspiration” from Norm to deliver services that are faster and done with fewer humans. Law firms can still make plenty of money even while clients like Bain pay less, he said.

“There is no lack of desire to serve clients,” Harris said. “It’s merely the physics of the way law firms have been built historically. So there is this race: How quickly can they retrofit themselves to compete with these new models? Not all firms are going to make it.”

For clients whose law firms don’t adapt, he said, “Norm will be a great answer.”

Some traditional law firms have heard the message and are pouring their own resources into AI strategies. Kirkland, perhaps the most prominent example, plans to spend $500 million to develop its own AI platform in the coming years.

“Tools that sit atop and amplify our sprawling web of institutional knowledge, that is our real competitive advantage,” Kirkland partner Erica Berthou said in June, discussing a product the firm built with Palantir Technologies Inc.
AI Talent Battle

The challenge for Big Law and AI-native firms alike is that clients can’t reliably know upfront which is best suited for their matters, said Avi Gesser, a partner at Debevoise & Plimpton. Gesser developed an AI platform inside his firm that’s also used by Blackstone and other large financial clients.

Client work typically blends the line between commoditized tasks and unique matters with higher stakes, Gesser said. Big Law firms and AI natives are trying to bridge the same gap: Adding the important qualities possessed by the other to provide a full-service answer for clients.

Who wins will boil down to who is better suited to adapt, according to Gesser. Will the AI-native players get as good at the complex work as the traditional law firms? Or will those traditional players get as good at using AI for repeatable work as the new AI-anchored competitors?

“My goal is that Debevoise gets there first and we are able to provide everything all under one roof including the commoditizable stuff through AI,” Gesser said.

Big Law firms’ proven revenue model is an advantage that lets them afford to build AI workflows, he said, while venture-backed AI firms will face time pressure to quickly scale partner-level services that carry high costs.

Gesser may be an outlier. Other partners who’ve built AI-based practices inside large firms have left to stake out on their own. About 45% of in-house attorneys said law firms rarely or never included their use of AI as part of their pitches in the last six month, according to Bloomberg Law’s State of Practice Survey released in June.

For now, both sides are engaged in a talent battle.

Big Law firms are looking to hire people who have a rare combination of skills: a technology background and 10-plus years of experience in Big Law.

Big Law could also repurpose its own associates. Goodwin Procter said last week it took six associates away from day-to-day lawyering to build a venture financing tool that uses a customized version of Anthropic PBC’s Claude platform. The firm hopes to have 100 lawyers working full-time by the end of the year to build AI tools, working alongside about 100 designers, engineers, and other business professionals.

Norm Law’s leaders say they want Big Law associates who have done the legal work before and can be trained on the technical aspects of AI.

“About 10 different top law firms have reached out to us in the last two months saying we have to hire legal engineers,” said Sean Burke, a legal recruiter who has worked with Norm to hire associates from top law firms. “And what they want is what Norm is doing. So Norm is just way ahead of everybody.”

Norm Ai’s cash salaries for legal engineers are lower than Big Law associate pay, Burke said, but the job comes with an equity component that makes the total compensation “comparable.” Job posts for associates in Norm Law offer salaries between $270,000 and $410,000.
Can It Scale?

Schmidtberger is optimistic that Norm will scale to take on more complex matters.

It will use agents to automate the first pass on those matters and hone its skills by ingesting client playbooks and guidelines to learn their preferences, he said. And it charges exclusively on a fixed-fee basis.

He sees the Big Law model hindering firms driven by billable hours and compelled to maximize annual profits.

“They will do the job better and faster,” he said. “I doubt they will do it more economically, because they’re dependent on generating the same or better profit pool to keep their partners in place.”

There is a “strong opportunity” to build agentic workflows for legal work done for private equity clients, said Josh Kubicki, who advises law firms on AI strategy and is a lecturer at Indiana University Maurer School of Law. Norm Law’s model pairing those agents with partners to negotiate and sign off on deals represents “a direct, competitive threat to all the private equity law firms out there,” he said.

“Because they are not an incumbent law firm in private equity, they are able to actually build an agent layer without concern about cannibalizing their leverage model,” he said, using the industry term describing revenue brought in by junior lawyers.

Kaul said he’s happy to pay lawyers to get important things right. He relies heavily on Big Law partners who steer him through legal tasks that he said will remain expensive, such as complex litigation, major transactions, and intellectual property disputes.

Much of Norm’s success, he said, will depend on its ability to recruit more of those top partners. Kaul never works with junior lawyers, he said, and he thinks their work can be done better by AI agents.

Big firms should view Norm as “an incentive to reevaluate their business and see how they should adapt” to a world where rivals are fueled by general processing units, rather than human lawyers, according to Kaul.

“You could be a super genius lawyer out of Harvard,” he said, “you’re not going to compete with a GPU.”

https://news.bloomberglaw.com/business-and-practice/norm-ai-builds-backing-from-clients-big-law-cant-afford-to-lose

— Graphics by Michael Domine/Bloomberg Law