Second Brain

Professional services firms used to win by attracting, training and retaining the best people in their industry. This is a recipe for extinction in the AI era.

Today’s firms need to discover the frontier between minds and machines – what is automatable and what is uniquely human – and relentlessly offload any work beneath that threshold to AI.

Model capabilities keep improving so this is a moving target. Firms need to become dynamic centers of research and immense invention.

This is a significant shift that upends century-old business models, and it’s already under way.

White Collar’s Bessemer Steel Moment

In the early 1800s, steel was made by blistering wrought iron in an oven, between layers of coal, for up to six weeks. Steelworkers were artisans. The more experienced ones would read the color of flames to forge purer metals.

Steel was in short supply. When it was available, it was of mixed quality.

This all changed in 1856. Henry Bessemer introduced a method to produce high quality steel, fast and cheap, using hot air and pig iron.

This wasn’t just a turning point for steel, but also for steel mills. Factories were no longer just factories. After Bessemer, mills became centers of research and discovery, inventing increasingly better methods of production.

This, more than anything else, made skyscrapers and transcontinental railroads possible.

Today, professional services firms are having their Bessemer steel moment.

Neofirms are Replacing Traditional Services Firms

Computers can do complex knowledge work that was previously the exclusive domain of skilled attorneys, consultants or accountants. In order to survive, professional services firms need to change how they are structured and run. This idea is so pervasive that my SF friends already have a name for it: the Neofirm.

Traditional firms are partnerships designed to lock in top professionals. They bill by the hour and don’t sell equity to outside investors. They are not set up to experiment or innovate.

Neofirms are different. They are defined by:

An equal split of practitioners and engineers/AI researchers
Corporate structures that encourage R&D investment and long term equity
Business models that charge for outcomes instead of hours worked
Obsession over defining, measuring, and constantly improving quality

Neofirms Are Built for Long Term ROI

Traditional firms generate plenty of cash, but they are not designed to invest in the long term.

America’s top 100 law firms made a combined

in profit in 2025, greater than

. Every cent was paid out to the firms’ partners as compensation.

Imagine if they had allocated even a fraction of these profits into R&D instead. What kinds of technology could they have built to advance the industry?

Traditional firms are structured as partnerships that pay out profits every year as a dividend. They legally can’t sell equity to outsiders. They have little incentive to invest in the future.

Neofirms are corporations, able to raise venture capital and take risks with long term payoffs. They are not selling human labor; instead they are selling the value that comes from better ways of working.

In my work at Crosby, this means sacrificing today’s revenue in favor of tomorrow’s profit. This isn’t a hypothetical tradeoff. Every hour a lawyer spends experimenting with an engineer is time they could have spent working on a new client’s request. It’s lost revenue, and we argue about how to allocate lawyer time constantly.

But our goal is to increase long term value, not annual profits-per-partner. Plus, we bill by the document, not by the hour. So when a Crosby lawyer spends an afternoon writing agent benchmarks, we know this could save us twenty days of her time next year, which creates future margin we can reinvest. That is clarifying.

Charlie Munger famously said, “Show me the incentive and I’ll show you the outcome.” SpaceX moved spacecraft development from a cost-plus model – where they got paid for each hour worked – to fixed price – where they got paid for results. Aligning incentives spurred them to redefine what was possible, like building rockets that return to a launchpad.

Neofirms in every professional services industry will build their reusable rocket equivalent.

Higher Quality, Faster

In the 1980s, the evidence-based medicine movement took off. It emphasized scientific evidence over physician judgment and transformed US healthcare. No similar movement took hold in white collar work because, unlike patient outcomes, work quality was notoriously hard to measure.

That’s not true anymore.

Over the past few years, AI researchers have learned to distill squishy subjective standards into rigorous, objective ones. They’ve built

to be certain that models are getting better at complex white collar work.

At Neofirms, expert professionals and researchers design evaluations to measure the output of all work, human or agent; this creates a tight feedback loop that helps rapidly improve quality. Neofirms don’t just assure you of their competence, they prove it. Instead of choosing your banker based on their alma mater or firm prestige, you will ask to see their benchmarks.

This doesn’t mean that seniority or experience is irrelevant. On the contrary, Neofirms will make elite partners even more valuable, leveraging them with armies of agents. Nor does it mean that everything top lawyers or consultants do can be quantified. Sometimes you are paying for reputation.

Even still, as more tasks become measurable with evals, you will be able to choose between a $3,000/hour partner and a $1,000/hour partner and actually know the difference.

Different, Not Just Better

As software gets easier to write, the thing that matters most is deciding what to build. Teams made up of engineers and active practitioners have an unfair advantage here. They are in the weeds, able to rapidly iterate on ideas with real clients. They are positioned to create the next decade’s best technology.

We lived this in our earliest days at Crosby. We piloted every off-the-shelf legal AI tool we could, but nothing was perfect. This was annoying at first, but quickly became existential. As AI’s automation threshold increased, and as we discovered subtle ideas that could improve our lawyers’ and clients’ lives, we faced reality: we had to write our own code.

Working with a Neofirm won’t feel like working with a faster banker. It will be an entirely different experience. Over time, the distinction between software and services companies will disappear.

For now, this might look like your accountant giving you an ETA on every request and remembering astonishingly nuanced context about your business and customers. Soon, your tax advisor will predict, with certainty, that you will get audited. Your insurance broker will dynamically change your policies based on your codebase. And your lawyer’s agents will negotiate with your counterparty’s agents, to eliminate months of contract redlining.

Neofirms don’t buy SaaS or opinionated wrappers. They don’t request features from vendors. They build on top of LLMs themselves, exploit the secrets they’ve accumulated, and ship products they know their clients will love.

Strange Bedfellows

LLMs are best suited for jobs that contain huge volumes of unstructured, qualitative text. Code generation ranks first, but professional services work ranks second.

This is an awkward coincidence because accountants, lawyers, consultants and bankers are deeply averse to change. This is not meant as a criticism. Stability and risk mitigation are major parts of the value they provide to their clients.

But it means that, while software developers

for adopting new technologies fast, white collar workers get penalized.

Neofirms solve this problem. They pair subject matter experts with cutting edge researchers to take full advantage of the AI era. Their business model encourages practitioners to hand off tasks beneath the automation threshold, instead of clinging to old ways of working.

When skilled human labor can be automated, the winning businesses build the machines that build the machines. This happened at Bessemer’s steel mills, on SpaceX's launchpads and in Mass General's operating rooms.

Your law firm, accounting firm or insurance brokerage will be next. The white collar revolution has already started.

If you want to work with the best Neofirm in law, please reach out.