Big Law has a complex relationship with artificial intelligence. Tools that increase attorney efficiency can reduce billable hours.
Nick Fleischer learned this the hard way at McKinsey, where he helped elite law firms deploy technology tools, often with little enthusiasm from the lawyers he expected to use them.
“It was like pulling teeth,” Fleischer said.
This job prompted Fleischer to leave McKinsey and found the company in August. His startup, Sandstone, is aimed squarely at in-house legal teams rather than law firms, an idea backed by Sequoia Capital.
The Brooklyn-based startup has raised $10 million in a seed funding round led by Sequoia Capital, Business Insider has learned. Backers include Carney Jackson, SV Angel, The Chainsmokers Mantis VC, Daybreak Ventures, and a group of corporate general counsel including eBay and Bilt.
Sandstone uses AI to help in-house lawyers draft and review contracts based on how they have handled similar contracts in the past.
McKinsey hired Fleischer from the Wharton School. He was part of a team advising a major law firm and worked closely with the firm's AI arm, QuantumBlack, including on a project with the American Arbitration Association to develop an “AI arbitrator” for construction disputes.
In his final months at McKinsey last year, Fleischer held dozens of workshops for general counsel who could not justify a full commitment to McKinsey but wanted enough background to build their own technology strategy.
Fleischer said many in-house teams are still grappling with fundamentals, such as whether they're using contract lifecycle management software correctly, how they track external legal spending, and where their data actually resides.
He was shocked at how quickly his attitude began to change. Fleischer said general counsels are increasingly being told by CEOs and boards of directors that they have the authority to adopt AI, even before it's clear how AI will impact costs and headcount.
While off-duty at McKinsey, Fleischer worked with colleague Jarrid Strydom, a former technology lawyer and coder, to build a task tracker for lawyers. They shared it with some in-house lawyer friends, who started using it and helped validate the idea. The two pitched to Sequoia on their final day at McKinsey.
Sandstone has dozens of paying customers, most of them mid-sized businesses with several lawyers. Fleischer said software companies make up the majority of the company's user base, but the company also works with customers in manufacturing, finance, logistics and insurance.
Sandstone pitches are not new. Harvey started by selling tools to elite law firms and then expanded to large corporations. Clio, a case management platform, built a tradition of serving small law firms and is now moving into the enterprise with a new division for in-house teams. A growing number of startups are creating tools to mass-produce contracts and scan them as they arrive in legal inboxes.
What Fleischer was missing was a system of record for the company's legal team. That means a single place to get legal work done, get context from systems like email and Salesforce, and track what your legal team is actually doing on a day-to-day basis.
“There's no platform that in-house lawyers would think of as their core operating system,” Fleischer said. “We can be that home.”
Sandstone is built for lawyers, but it's also designed to handle the constant knocks on the door from other parts of the company. Sales reps can drop draft contracts into Slack for Sandstone to review. Fleischer said the system compares the contract to the company's past deals, house styles and sales call notes stored in Salesforce, flags risks and suggests edits, then sends the draft to the appropriate attorney for approval.
Fleischer said that if Sandstone is successful, lawyers could spend less time organizing requests and more time considering cases that actually require human judgment.
Bogomil Balkansky, a partner at Sequoia, was first introduced to Fleischer through the firm's human resources team, and the consultant was noted as someone to approach. Initially, Mr. Balkanski sought to hire Mr. Fleischer to help manage portfolio companies.
After several meetings, Fleischer told Balkanski that he wanted to start his own legal tech company instead. Sequoia has decided to lead Sandstone's seed round.
The bet comes as investor interest in legal tech accelerates. Funding for the sector nearly doubled last year, rising from $2.2 billion in 2024 to $4 billion in 2025, according to Crunchbase. More than a third of that money went to three companies: Harvey, Clio, and Filevine, a system for managing legal operations.
Sequoia backed Harvey in its early stages and last year led a seed round for Crosby, a startup that combines software and lawyers to handle contracts for early-stage companies. Asked about investing in companies that might end up competing, Balkansky said Sequoia's criteria comes down to whether the market is large enough to support multiple winners.
“AI is turning the human workforce into software,” Balkanski said, noting that the legal industry is particularly ripe for change. There are more than 1 million lawyers in the United States, many of whom are among the highest-paid professionals hired by companies.
According to Fleischer, legal AI will work where lawyers are valued for their speed of business, rather than where they bill by the hour.
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