The legal AI market has been one of the fastest-moving corners of the tech industry over the past year. Harvey, the best-known AI tool for law firms, raised $200 million at an $11 billion valuation in March. Legora, a Swedish rival, raised $550 million at a $5.5 billion valuation the same month. Together, two companies claimed over $16 billion in combined value in a market that barely existed five years ago. Legal tech investment across the board hit $4 billion in 2025, up 77% from the year before.
All of that money has mostly chased one type of customer: law firms. Big practices with large teams, complex cases, and the budget to pay for premium tools. Sandstone is not trying to compete there. It is targeting the legal teams that exist inside every mid-sized company, the general counsel at a logistics firm, the two lawyers inside a retail group, the solo attorney at a manufacturer. These teams handle high volumes of routine work: contract reviews, vendor agreements, employment questions, and compliance checks, all coming in from different parts of the business through different channels at the same time.
The core problem is coordination, not legal reasoning. Requests come through Slack, email, and project management tools like Jira, and there is no central system to receive, prioritize, or track them. Sandstone pulls all of that into one place, sorts requests by type and risk level, routes them to the right person, and lets teams build custom automated workflows on top. It also pulls in context from other business systems, such as sales data from Salesforce or HR records, so a lawyer reviewing a vendor contract can see relevant history without hunting for it.
The company was founded in September 2025 and went public with a $10 million seed round in January 2026, led by Sequoia. Six months later, Lightspeed Venture Partners led the $30 million Series A. Sequoia has now backed two separate in-house legal tools, Sandstone and Harvey, which itself is expanding into corporate legal teams. The investor conviction here is that in-house legal is a distinct enough market to support specialized tools, not just firm-focused ones adapted for corporate use.
That thesis faces a serious test. In May, Anthropic launched a full suite of legal AI tools under the Claude for Legal banner: 12 practice-area plugins, over 20 integrations with tools lawyers already use, and direct connections to Westlaw for legal research. Anthropic's move rattled legal tech stocks when it first surfaced in February, and the May expansion was considerably more substantial. A webinar Anthropic held for legal professionals drew more than 20,000 registrations, the company's largest legal session ever. Anthropic is now positioned not just as the invisible model powering tools like Harvey and Legora, but as a direct competitor for lawyer attention.
For Sandstone, the risk is not the big law firm market. It is that Claude for Legal eventually builds the intake, triage, and workflow automation features that Sandstone is selling, and does so at no incremental cost for companies already paying for Claude. Sandstone's answer is depth: a platform built around how in-house teams actually work, with context from HR, sales, and finance baked in, rather than a general-purpose assistant asked to handle legal tasks.
The broader adoption data supports the urgency. According to survey data from FTI Consulting and Relativity, 87% of general counsel now report using AI within their teams, up from just 44% a year earlier. That number tells you the conversation has moved from "should we try AI" to "which AI and how." For the legal department at a mid-sized company with no dedicated legal ops team, that question is now very much open.