AI Boosts Legal Productivity Without Toppling Billable Hours

Despite the widespread and well-funded rise of artificial intelligence and automation in the legal industry, the billable hour remains the most resilient pricing model there is. It works, clients tolerate it, and technology—far from killing it—may actually strengthen it.

Silicon Valley’s standard playbook is to find a high-value market with low satisfaction and “fix” it. We’ve seen this with taxis and Uber, retail and Amazon, food delivery and DoorDash. Legal seems like the perfect first victim for the insuperable pace of AI-driven technology change.

Everybody knows that the business of law is complex, expensive, and often inefficient. AI apostles predict three big step-changes in the industry. First, lawyers will be replaced by AI tools that can “read and write faster than any human.” Second, law firms’ pricing models will collapse because faster delivery should mean less billable time. And third, new AI-native firms will undercut legacy firms with cheaper, fixed-fee models.

To prospective clients and investors, the development of what you might call the “innovation consensus” in law has been an attractive story. It’s also a popular narrative within the sector itself. Eighty percent of legal professionals believe that AI will have a high or transformational impact on their work within the next five years.

But while technology will change how lawyers work, it won’t change how they charge. The billable hour persists because it solves problems no other pricing model can. Legal work is inherently unpredictable: litigation twists, regulatory hurdles, and human disputes rarely fit into a neat project scope, which makes it very hard to contain within a fixed-fee or predictive pricing structure. It’s also fairly allocative, because clients pay for time and expertise, not abstract value.

The billable hour is also robust because it simplifies cost whilst accounting for the inevitable complexity of legal work. Unlike consulting or banking, law rarely has clean outcome-based key performance indicators. Lawyers are paid to advise, not to guarantee results, which favors a pricing model based on time rather than specific deliverables. Markets tend to preserve what works, and it’s unlikely that radical change will upend this model any time soon.

It would be misleading to say that the billable hour is universally popular. It’s expensive and the “least bad” option. Clients however, still like it enough for it to be considered a necessary feature of the services they are paying for. The data bears this out. In 2024, the average US lawyer billed $341 per hour, while Am Law 100 firms averaged $961, a 4.8% jump from the year before. Top-tier partners in New York now exceed $1,500 per hour.

If technology were truly eating legal pricing, we’d see the opposite. Clients aren’t blind to the challenges to the status quo raised by the introduction of new technologies; they’ve simply rationalized the trade-off between risk and return. Legal procurement is now panel-based, competitive, and Request for Proposal-driven. Alternative fee arrangements sound good, but they transfer risk to firms and often disincentivize the diligence which is in large part what clients pay for when they contract expensive lawyers. Hourly billing, by contrast, is transparent and easy to audit.

To believe AI will end hourly billing, you must also believe it will flip the power relationship between clients and firms. That’s not happening anytime soon, and there are good reasons for this. In-house legal teams often don’t want the kinds of work that law firms are brought in to do. Because of the nature of their roles, which are tied implicitly to whatever industry they’re working in, they lack the ownership and bandwidth to implement and maintain AI systems in the same way that a large multinational firm can. Even when tools exist that can automate aspects of legal workload, most corporate legal teams use AI as support, not substitution. The work will always need human verification, and verification takes time.

According to the Reuters Future of Professionals Report 2025, productivity tools in the law profession have the potential to save lawyers nearly 240 hours per year. The irony of AI efficiency is that it often increases perceived value. Tools that make lawyers summarize, analyze, and draft faster are augmenting their capabilities rather than replacing them. They raise expectations of insight and responsiveness and the result is a more productive lawyer whose hours are worth more, not fewer.

Even the so-called “AI-native law” firms are quickly converging on traditional pricing because, in the end, their clients still prefer flexibility and precision over cost efficiency. Technology enables faster delivery, but not necessarily cheaper delivery, and most clients care more about outcomes than savings when the stakes are existential.

The billable hour endures because it reflects how legal work actually happens. It’s an unpredictable, high-stakes, and entirely human industry. Until clients value outcomes over hours, and AI earns their trust in doing the same, the clock will keep ticking.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Michael Grupp is CEO and co-founder of BRYTER.

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