Legal AI and the Billable Hour Question

One concern we sometimes hear from lawyers considering AI adoption is: "If AI makes my work faster, won't it reduce my billable hours?" It's a fair question, but after speaking with hundreds of legal practitioners, a very different picture has emerged. Here's why many lawyers are now eager to adopt AI software.

Table Stakes

Legal work is fundamentally mediated in language, follows predictable patterns, and is therefore extremely well suited to language models. Clients are increasingly aware of this. They expect their lawyers to use the most innovative AI tools available, and many are starting to ask about it directly. Firms that don't adopt AI risk falling behind competitors who do. What was once a differentiator is quickly becoming table stakes.

Higher-Quality Work

The conversation about legal AI often focuses on speed, but that's only part of the story. Vertically focused AI – tools built specifically for legal work – helps lawyers produce more consistent, comprehensive, and accurate work product. This higher quality work strengthens lawyers’ reputation and helps them win more clients over time.

Non-Billable Work Gets Automated Too

Here's something that often gets overlooked: lawyers spend significant time on tasks that aren't billable at all. Administrative work, internal communications, knowledge management, matter organisation – these activities consume hours that could be spent on higher-value work.

State-of-the-art language models can now take on highly complex, multi-turn tasks. As a result, many repetitive, manual workflows can finally be streamlined end-to-end. This frees up time for substantive legal work that actually generates revenue.

The Rise of Fixed Fees

We are witnessing a shift from billable hours to fixed fee arrangements, driven by client demand for greater cost predictability across matters from routine work to complex litigation.

As firms increasingly opt for fixed-fee work, AI enables faster delivery and more predictable costs. This actually improves margins on fixed-fee matters while delivering better value to clients. It's a win-win that aligns incentives for everyone involved.

The Microsoft Word Analogy

When looking ahead, I find it helpful to make an analogy between AI agents and Microsoft Word.

Since the early 2000s, Microsoft Word has been the dominant text editor for law firms and a baseline legal skill. Word makes drafting, revising, and formatting faster. It augments lawyers' productivity. Yet no one questions its place in legal work today – it's simply the de facto standard for producing legal documents.

AI agents will follow the same path. Today, adoption is optional and early adopters gain competitive advantage. But soon, using AI won't be debated. It will simply be assumed.

The Bottom Line

The question isn't whether AI will reduce billable hours on individual tasks – in many cases, it will. The real question is whether you want to compete for work in a market where your competitors are using every available tool to deliver better results faster.

The lawyers I've spoken with who have embraced AI aren't worried about billable hours. They're winning more work, producing better results, and spending their time on the intellectually challenging work that drew them to law in the first place.