Crosby, a venture-backed law firm founded by Ryan Daniels and backed by Sequoia Capital and Bain Capital Ventures, is taking out professional liability insurance for its AI agents so they can perform autonomous legal work without mandatory lawyer review. The move marks a significant departure from how legal tech companies have traditionally operated, signaling a potential shift in how AI might reshape the legal profession.

What Does This Mean for the Future of Legal Services?

For years, AI-powered legal tools have walked a careful line: they tout what artificial intelligence can accomplish while simultaneously insisting that human lawyers must review every output before it reaches clients. Crosby is changing that equation. In a LinkedIn post this week, Daniels announced that the company would obtain professional liability insurance for its AI agents, enabling them to deliver what he calls "insured output" directly to users without mandatory legal review.

"Today, our lawyers review every single work output," Daniels wrote. "As agents have improved in leaps over the last few months, it's become clear this won't be necessary in the future." The company is suggesting that users could ask Crosby a question about a contract and receive an immediate, insured answer from one of its AI agents.

This approach challenges a fundamental assumption in the legal industry: that human judgment and accountability are non-negotiable components of legal work. Oliver Roberts, who teaches about AI and the legal industry at Washington University in St. Louis, believes this is just the beginning.

"We should expect more legal technology companies to pursue this path in the coming months and years," Roberts said.

Oliver Roberts, AI and Legal Industry Instructor, Washington University in St. Louis

How Are Regulators and Bar Associations Responding?

The insurance announcement has exposed a regulatory gap that has plagued the legal profession for decades: there is no clear, universally accepted definition of what constitutes "the practice of law." This ambiguity has haunted online legal services like LegalZoom and Rocket Lawyer for years, but AI agents are forcing the issue into the spotlight.

Anthony Davis, a legal ethics lawyer and partner at FisherBroyles, points out that liability insurance alone does not resolve the fundamental legal question.

"The problem with the insurance question is that it totally begs the question: What are you insuring against? Are you insuring against a malpractice action? If it's a malpractice action, it assumes that the AI provider is practicing law," Davis said.

Anthony Davis, Legal Ethics Lawyer and Partner, FisherBroyles

States generally restrict non-lawyers from practicing law and providing legal advice, yet the definition of what constitutes legal advice remains murky. Crosby says it will work with auditors, bar associations, and state regulators as it moves forward, but the company is essentially asking regulators to define the boundaries in real time.

Some regulatory efforts have begun to emerge. New York lawmakers introduced a bill last year that would impose liability for damages if someone used a chatbot to impersonate licensed professionals like lawyers. OpenAI has also argued in litigation that users are not supposed to use ChatGPT as a lawyer. However, regulators and bar associations have historically focused more on disciplining lawyers themselves than on the broader question of who can legally provide legal services.

Steps to Understanding AI Agent Accountability in Law

• Liability Insurance: Crosby is obtaining professional liability insurance specifically for its AI agents' outputs, allowing the company to offer "insured" legal work without mandatory human review, a first in the legal tech industry.
• Lawyer Oversight Remains Standard: Despite Crosby's move, lawyer review of AI outputs remains the overwhelming standard throughout the legal industry, with new AI-native law firms still employing teams of lawyers to verify outputs.
• Regulatory Ambiguity: There is no clear legal definition of what constitutes "the practice of law," leaving bar associations and state regulators without clear guidance on whether AI agents can legally provide legal advice.
• Jurisdictional Requirements: In most jurisdictions, law firms must still be owned by lawyers, meaning there is always a responsible lawyer who can be held accountable if something goes wrong, even as AI becomes more autonomous.

Vincent Rezzouk, a privacy, data, and AI partner at Bird & Bird, emphasizes that insurance cannot fully shield an AI-powered law firm from consequences. He notes that even as AI becomes more autonomous, there is always a lawyer somewhere who bears ultimate responsibility.

"We can artificially pretend that it's all agents and there's no lawyer. But I think that at this stage, there is always a person behind. There's always a responsible lawyer who will take the overall responsibility and who will be responsible and subject to discipline if things go wrong," Rezzouk said.

Vincent Rezzouk, Privacy, Data, and AI Partner, Bird & Bird

Will Other Legal Tech Companies Follow Crosby's Lead?

Jake Sendar, who founded a tech company that automates legal work tied to transactions, sees Crosby's move as a potential turning point, though he questions whether it aligns with what customers actually want from AI-powered legal services. He previously understood the main appeal of AI-native law firms to be that they combine "the efficiency and cost savings of AI combined with the judgment and accountability of experienced professionals".

Crosby's approach suggests that lawyers might not be central to lawyering after all. "They might be right, and in many ways this is the natural end-state of a truly AI-native law firm," Sendar observed. However, he also noted that this represents a departure from the perceived value proposition that attracted customers to AI-powered legal services in the first place.

The insurance announcement raises a critical question for the legal profession: as AI agents improve, will the profession gradually shed the requirement for human oversight, or will regulators and bar associations establish clear boundaries that keep lawyers in the loop? Crosby's bet suggests the company believes the former is inevitable. Whether regulators agree remains to be seen.