Legal AI startup Norm closed a $120 million Series C round at a $1.2 billion valuation, led by Khosla Ventures.

The New York-based company has now raised more than $260 million since its founding three years ago. Khosla Ventures was the first institutional investor in OpenAI.

Norm operates an AI-native law firm that uses AI agents to serve clients as outside counsel. The agents are built by AI engineers and lawyers, then supervised by senior attorneys during deployment.

The company charges by outcome rather than hourly rates, creating what it calls "client-aligned incentives" that differ from traditional law firms and token-based AI providers.

Norm claims its technology serves clients representing more than $300 trillion in assets. The legal sector has drawn significant AI investment this year, with Stockholm-based Legora raising $550 million and San Francisco-based Harvey securing $200 million.

The industry's reputation for repetitive, time-intensive work makes it a natural target for automation. Anthropic launched specialized legal plugins in February, signaling broader tech industry interest in the sector.

"As AI capabilities race forward, one of the greatest opportunities is to build the interface between AI and the most legitimate encapsulation of human values: law," said John Nay, Norm's founder and CEO.

The Series C included participation from Blackstone, New York Life, Tony James (former Blackstone president and COO), Fenwick LLP, and TIAA.

Norm plans to use the funding to hire staff, advance its AI agents' capabilities, and expand into new industry verticals.