SWITZERLAND’S FIRST AI‑NATIVE LAW FIRM

1 · Technology

Most of Big Law treats legal AI as buying a platform, building some workflows on top, and that’s pretty much it. The result is that much of the progress frontier models have made over the past six months is not reflected in what legal AI can do. This is true even at the few firms trying something different, like K&E or Freshfields. To get the most out of AI you need to build a whole system around it: merge the data management systems with the LLMs and use the data you already have in a way that compounds: a linked knowledge base rather than a traditional DMS.

The second oversight is governance. In M&A the key edge is not cost but speed, and today’s firms aren’t much faster with AI: the existing processes still slow them down. As a result, Big Law has not vastly improved the quality and speed of client work despite AI investments. With a very granular governance framework you can hand off parts to the model with high reliability and increase speed greatly.

2 · Incentives

In traditional firms these are greatly misaligned. The internal misalignment is reflected in existing career ladders, billable hour targets, bonus schemes, how associates are encouraged to use these tools, and how data is used and shared within the organisation. Externally, fee arrangements fail to reflect a changing cost basis while undervaluing strategic recommendations and judgement.

3 · The shift from low to high capex

Growth in legal has long meant convincing partners to join and building reputation, so firms under‑fund this shift. Now that AI is dissolving the barrier between labour and capital, growth will mean investing heavily in technology. That is the only way you don’t commoditise your output by using AI (off-the-rack legal AI turns elite law firms into shops selling commodity outputs). Building proprietary technology that captures IP and intangible assets of the firm locks in long‑term growth.

The obvious counter‑argument: maybe AI‑native firms do take market share from Big Law, but which startup firms hold on to their clients? How do you make sure you’re the firm that wins?

1 · Where we enter

Almost all AI‑native firms target the lower middle market, assuming they disrupt that segment while the market as a whole stays as it is. That assumption seems wrong. Their disruption changes the market: the segment they disrupt commoditises, margins compress, and moving upmarket afterwards is almost impossible – Band 2 & 3 firms have tried for 30 years. We enter directly into large‑cap M&A and banking, which very few are doing: Norm Law, the Kirkland Initiative and 2–3 others.

The bigger point: AI makes capital a real input into law firm growth for the first time. Law firms have been high free cash flow and near‑zero capex; that changes. Converting capital into growth becomes central to the business, and it compounds: every matter makes the technology better, and better technology wins the next matter. The lead grows on its own. Whoever starts compounding first stays ahead. Size today doesn’t decide it. The AI‑native firms today ignore this entirely. We build for the market that will be, not the market that is here today.

2 · The loop

The way we work is called loop engineering. Engineers have worked this way for years; law has not. The system never waits for a prompt: it reads what arrives, assembles context, drafts, checks, and flags what needs a lawyer. So the job changes. You don’t operate tools; you maintain and improve a system that works while you sleep. And we build for a capex‑driven legal industry by becoming the best at turning capital into growth: a new thing in the legal sector.

Finally: how do you capture value in this new setting? Today companies pay MBB, the Big 4 and tier‑one law firms for a combination of relationships and judgement – assets that historically could never be tied to the organisation. If a partner leaves, the client book leaves with them. Their firm is just an exchangeable platform. The goodwill and IP inherent in professional service firms could never be monetised.

Proprietary technology changes that: you capture the judgement in a way that makes the IP of an AI‑native law firm extremely valuable. Valuations already reflect this: Manifest and Norm AI sit at $750Mn and $1.2Bn respectively. Part of that is the growth expectations central to all venture deals. But a large part is that this is the first time IP and judgement in professional services can be captured at all. As a result of this shift around tying IP and judgement to the platform, the winners among AI-native firms will capture future profits durably.