Prior to the formation of The Firm, future members and affiliates of the group were at transitional stages of their careers. Following the acclaim of his landmark debut album Illmatic (1994), Queensbridge-based emcee Nas decided to concentrate his efforts in a mainstream direction. Despite its significant impact on hip hop at the time, Illmatic did not experience the larger sales of most major releases of the day, due in part to Nas' shy personality and withdrawal from promoting the record. Nas began to make appearances on other artists' work, including Kool G Rap's "4,5,6" and "Verbal Intercourse" on Raekwon's Only Built 4 Cuban Linx... (1995), which made him the first non Wu-Tang member to appear on one of their recordings. Nas began to dub himself as Nas Escobar on these guest appearances. Meanwhile, his excessive spending habits had left him with little money, as Nas had to ask for a loan to purchase clothes to wear to the 1995 Source Awards. The success of fellow East Coast act The Notorious B.I.G. at the awards show sent a message to Nas to change his commercial approach, resulting in his hiring of Steve "The Commissioner" Stoute as manager. While Illmatic attained gold status, Stoute convinced Nas to aim his efforts in a more commercial direction for his second album, after which Nas enlisted production team the Trackmasters, who were known for their mainstream success at the time.
Meanwhile, Brooklyn-based female rapper Foxy Brown was brought to the attention of the Trackmasters, who were working on LL Cool J's Mr. Smith (1995). After impressing the production team with an on-stage freestyle rap, she earned a guest appearance on Mr. Smith, contributing a verse to the remix of "I Shot Ya". Throughout 1995 and 1996, Brown appeared on several platinum and gold singles, including Jay-Z's "Ain't No Nigga" and the remix of Toni Braxton's "You're Makin' Me High". Her appearances sparked a recording company bidding war in early 1996, leading to her signing to Def Jam Recordings. The success of "I Shot Ya" prompted her inclusion, along with rappers AZ and Cormega, in collaborating with Nas on the song "Affirmative Action" for his second studio album, It Was Written (1996). The collaboration came in the wake of the critical success of AZ's debut album Doe or Die (1995). He initially garnered attention with his appearance on Nas' "Life's a Bitch" (1993). Cormega, whose rapping career had been put on hold due to his incarceration during the early 1990s, was referenced by Nas on "One Love" (1994), and was released from jail in 1995.
Working with the Trackmasters as producers, Brown released her solo debut Ill Na Na (1996), which became a chart success and sold over two million copies.
According to critic Steve "Flash" Juon of RapReviews, the title of the album, as well as the group's name, was inspired by John Grisham's 1991 legal thriller-novel The Firm and the 1993 film adaption of the same name. While it was issued under the title The Album, writers and music critics have referred to the album with such titles as The Firm,Nas, Foxy Brown, AZ, and Nature Present the Firm: The Album, and The Firm — The Album, or The Firm: The Album.