A recently unveiled startup is focusing on leveraging artificial intelligence to streamline the responsibilities of corporate compliance officers.
Norm AI, founded and led by John Nay, a computer science expert who has instructed law students on generative artificial intelligence, has emerged from stealth mode. The New York-based company recently announced securing $11.1 million in a seed funding round spearheaded by Coatue Management LLC.
Rather than private contracts, Nay, 34, highlighted the company’s focus on public law and regulations. He underscored the significance of infusing societal values into AI systems through the lens of public law.
Amid a surge of startups capitalizing on artificial intelligence for legal compliance, Norm AI has developed an innovative regulatory AI platform. This platform automates specific regulatory tasks for chief compliance officers across a range of client companies, from small businesses to Fortune 100 corporations.
Transitioning from CEO to chairman of Brooklyn Investment Group LLC, Nay refrained from divulging specific clients. Apart from Coatue, the company has garnered support from M13 Ventures Management LLC, founded by entrepreneurs Courtney and Carter Reum, the latter being married to celebrity Paris Hilton.
Win Chevapravatdumrong, the current head of legal at M13, emphasized the importance of platforms like Norm AI’s in automating routine compliance tasks, especially in critical scenarios, to assist in-house legal professionals and compliance officers.
Norm AI points out that the US federal regulatory code has more than doubled in restrictive word count over the past five decades, from around 400,000 to over 1 million, increasing the complexity and time-consuming nature of compliance tasks, subsequently driving up costs.
Drawing on his vast teaching experience at prestigious institutions like NYU, Stanford, and Vanderbilt, Nay highlighted the challenge posed by dense 1,000-page regulations for most large language models. He stressed the necessity of breaking down such intricate regulations into more digestible segments to enable effective compliance assessments.
Norm AI’s strategy involves condensing extensive regulatory documents into smaller units and associated compliance tasks, simplifying assessment by large language models to ascertain compliance with specific regulations. This method creates a decision tree that can be navigated by human compliance professionals or regulators to track determinations at a granular level.
The Norm AI team, comprising legal experts and AI engineers, is currently focusing on the financial services sector due to the heightened demand in that heavily regulated industry.
Collaborating with various leading large language model providers, including OpenAI, Norm AI powers its AI platform. The company benefits from guidance provided by Fenwick & West, a law firm renowned for its startup support, and has established a regulatory advisory board featuring prominent figures such as Katherine “Kate” Karas, Troy Paredes, Vanessa De Simone from Coatue, and Susan Dudley, an ex-White House official and regulatory specialist.
