Sequoia Backs AI Startup Sandstone for In-House Lawyers

Sequoia Capital has led a $10 million seed funding round for Sandstone, an AI startup founded by former McKinsey consultant Nick Fleisher. The company is building an operating system designed specifically for in-house legal teams to manage contracts and track daily operations.

Fleisher's background includes advising elite law firms at McKinsey, where he observed significant resistance to new technology tools. Consequently, Sandstone is targeting corporate legal departments rather than external law firms. The platform utilizes artificial intelligence to assist lawyers in drafting and reviewing contracts by analyzing how the company has handled similar agreements in the past.

The startup has already secured several dozen paying customers, primarily midsize companies in the software, manufacturing, and finance sectors. Sequoia's investment reflects a broader surge in legal tech funding, which nearly doubled to $4 billion in 2025.

Nick Fleisher founded Sandstone in August after a tenure at McKinsey where he advised major law firms on technology strategies. His experience there highlighted a critical disconnect: while tech tools made lawyers more efficient, they also threatened the billable hour model used by external firms.

Fleisher described the process of getting lawyers to adopt new tools as "like pulling teeth." This resistance led him to pivot his focus toward in-house legal teams, who are measured by business velocity rather than billable hours.

While still employed at McKinsey, Fleisher teamed up with Jarryd Strydom, a former technology lawyer who codes. Together, they built a task tracker for lawyers and shared it with friends working in-house. The positive feedback validated the idea, prompting the pair to pitch Sequoia on their final day at McKinsey.

Fleisher's background includes graduating from the Wharton School before being hired by McKinsey. He worked closely with the firm's AI unit, QuantumBlack, on projects such as developing an "AI arbitrator" for construction disputes with the American Arbitration Association.

Sandstone aims to solve the lack of a centralized system of record for corporate legal teams. Fleisher noted that many in-house departments struggle with basic questions regarding contract lifecycle management software and tracking outside legal spend.

The platform is designed to handle the constant influx of requests from other departments. For example, a salesperson can drop a draft agreement into Slack, and Sandstone will review it. The system compares the contract against the company's past deals, house style, and sales call notes stored in Salesforce. It then flags risks and suggests edits before routing the draft to the appropriate lawyer.

Key features and goals include:

• Conducting and tracking legal work in one place
• Drafting and reviewing contracts based on historical data
• Integrating context from email and Salesforce
• Allowing lawyers to focus on human decisions rather than sorting requests

Currently, Sandstone has several dozen paying customers, mostly midsize companies with several lawyers on staff. A large share of its user base consists of software companies, though it also serves clients in manufacturing, finance, logistics, and insurance.

Investor interest in legal tech is accelerating, with funding in the sector rising from $2.2 billion in 2024 to $4 billion in 2025. A significant portion of this capital flowed to companies like Harvey, Clio, and Filevine.

Sandstone enters a market where competitors are already active. Harvey began by selling tools to elite law firms and has expanded into large enterprises. Clio, traditionally serving small law firms, is pushing into the enterprise space. Despite this, Bogomil Balkansky, a Sequoia partner, believes the market is large enough to support multiple winners.

Balkansky was initially introduced to Fleisher by Sequoia's talent team and tried to recruit him for a portfolio company. However, after learning of Fleisher's ambition to start his own legal tech firm, Sequoia decided to lead the seed round.

Other backers in the $10 million round include Kearny Jackson, SV Angel, Mantis VC (associated with The Chainsmokers), Daybreak Ventures, and a group of corporate general counsels from companies including eBay and Bilt.

The legal industry is undergoing a transformation as AI technologies mature. Balkansky stated, "AI is transforming human labor into software," identifying the legal industry as particularly ripe for change due to the high cost of legal professionals in the US.

Fleisher's bet is that legal AI will find its strongest foothold not in environments where lawyers bill by the hour, but where they are measured by how fast the business moves. This aligns with the mandate many general counsels are receiving from CEOs and boards to adopt AI, even before clarity on cost or headcount impacts.

In his final months at McKinsey, Fleisher ran dozens of workshops for general counsels who wanted to build their own tech strategies but couldn't justify a full McKinsey engagement. He observed a rapid shift in posture, with teams moving from wrestling with basic software usage to actively seeking AI adoption.

Sandstone's ultimate goal is to become the core operating system for in-house lawyers, providing a "home" for legal work that integrates seamlessly with the rest of the company's workflow.