Legal artificial intelligence platform Spellbook, described as “Cursor for contracts,” today announced it has raised $50 million in Series B funding led by Keith Rabois, managing director at Khosla Ventures.
The capital raise values the company at $350 million post-money and brings its total funding to over $80 million. New backer Threshold Ventures, and existing investors Inovia Capital, Bling Capital, Moxxie Ventures, Path Ventures and Jean-Michel Lemieux also participated in the round.
Launched in 2022, Spellbook is a generative AI tool designed for lawyers to enhance contract development, accuracy and improvement, aiming to reduce or eliminate tedious legal work. Powered by OpenAI’s GPT-5, the company’s platform is optimized to use legal-specific approaches to cover client expectations for contract law.
“We’re at the spreadsheet moment for lawyers,” said co-founder and Chief Executive Scott Stevenson. “Just as spreadsheets transformed accounting, large language models are transforming law after 20 years of technological stagnation.”
The company’s platform integrates directly into Microsoft Corp.’s Word document editor, where it acts as a legal companion for attorneys. Lawyers can draft new documents or review existing ones and receive AI-powered suggestions and feedback. It contains a library of prewritten clauses that can be inserted into documents with a click, and playbooks of detailed rules and recommendations for specific contract types.
Spellbook can connect with in-house document resources, including OneDrive and Dropbox, or with files uploaded directly, to ingest, analyze and index personalized and teamwide contract language. The company said this puts legal teams’ own deal history to work by finding past clauses already used by the firm that fit the current contract. With generative AI, it can find the right context to reveal appropriate clauses and language, without needing to sift through random documents searching with just keywords.
The company said the investment comes as the platform surpasses 10 million contracts reviewed. Customers of Spellbook include notable tech and enterprise firms Nestlé SA, eBay Inc. and law firm Kennedys Law LLP. It serves nearly 4,000 law firms and in-house legal teams across 80 countries.
“We think Cursor has been so successful because it’s like an electric bicycle for engineers,” added Stevenson, comparing the platform to the popular AI-powered coding tool from Anysphere Inc. “They already had a bicycle – with Cursor they are still pedaling and still steering, but they can get up hills much faster. We have the same philosophy at Spellbook.”
Similar to Cursor, Spellbook leans into agentic AI by providing a multi-document review and drafting capability called Associate.
This AI agent can autonomously examine document sets, update terms, party details and fix issues. Working from a chat interface, users can query document language and ask it to analyze and update legal work to revise documents in one sweep. During the entire process, it works with the lawyer and uses feedback to align its revisions.
The company said it intends to make its contract review platform stand out in the market by eliminating so-called “AI slop.” This refers to low-quality, often erroneous content produced by AI tools that has been spreading across the internet and the workplace thanks to the increasing adoption of generative AI. To combat this, Spellbook said, it grounds all of its outputs in real-time information and data to support attorneys.
The legal AI industry is still emerging, with a number of startups providing law firms and in-house legal teams with specialized platforms for document drafting, automation, contract management review and operations. Using generative AI in legal work is not without its risks; lawyers who have turned to general-purpose AI models, such as ChatGPT, have found themselves in legal trouble when chatbots “hallucinate.”
Personal injury law firm Morgan & Morgan sent a warning email to its attorneys in February, warning that AI models can fake case law and make up citations. A federal judge in Wyoming threatened to sanction lawyers at the firm after a filing contained fictitious cases. This follows almost monthly headlines about lawyers citing fake cases because of AI hallucinations.
In September, California issued a historic fine of $10,000 for a state court filing that included fabricated citations, stating that 21 of 23 quotes from cases listed in the opening brief were made up.
With this funding, Spellbook intends to expand beyond contract review into the wider field of transactional work. The platform will focus on the more than $1 trillion transactional legal services market and enhance its AI capabilities with superior contract intelligence grounded in market data.
The company has already begun rolling out features with this goal in sight, with the release of Market Comparison and Preference Learning in beta mode.
Image: News/Microsoft Designer
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