AI Does Little to Reduce Law Firm Billable Hours, Survey Shows

Supplementing the work of human lawyers with generative AI promises to make time-consuming tasks like document review more efficient—but clients aren’t yet seeing the technology make much of a dent on their law firm bills.

Nearly 60% of in-house counsel have seen “no noticeable savings yet” from outside counsel’s use of generative artificial intelligence, according to a survey released Tuesday by the Association of Corporate Counsel.

Among those who did see a positive result from outside counsel’s use of the technology, 13% pointed to fewer billable hours on tasks including document review and drafting, and 20% said they saw turnaround times improve.

“Law firms don’t know how to charge clients for using AI tools, and clients don’t know how to figure out, ‘If we request a reduction in fees because these tools are available, how do we do that?” said Weston Wicks, senior director on market research firm Gartner Inc.'s legal and compliance team.

Additionally, many corporate legal departments are only beginning to adopt the technology, and the tools often are slow to catch on internally, he said. Add to that the panoply of legal AI tools available from hundreds of vendors, and every law firm taking a different approach to what it’s using, and it’s not surprising that the legal industry’s billing models haven’t kept up, he said.

It will most likely be clients, not firms, that drive the next big shift in pricing for legal services, said Veta Richardson, the outgoing president and CEO of ACC.

“Clients have a lot more options now in terms of how they assure that the services their organizations need are provided,” Richardson said. Legal departments will also be adopting AI themselves, replacing some work law firms had done.

AI Slow to Take Root

AI adoption has been moving slowly across the profession. Bloomberg Law’s recent State of Practice survey found that 21% of attorneys at both law firms and companies said they used generative AI about once a day, but a third said they hadn’t touched the technology in the last six months.

More than 60% of the ACC survey’s respondents said they also thought “that it is simply too early in the adoption cycle for cost reductions to have materialized,” the organization said.

But ACC’s report does point to how corporate legal departments are using AI, Richardson said: It’s “not just for productivity, but as a strategic tool to reduce reliance, in some cases, on outside counsel and to cut costs,” particularly in labor-intensive legal work. The report also shows 64% of respondents expect to bring more work in-house.

That shift “will put pressure on law firms in terms of thinking about how they price for legal services,” Richardson added.

Already, more companies are adding provisions to outside counsel guidelines asking that lower-risk tasks be done by AI—and that those time savings be reflected in the billable hours charged, Wicks said.

The ACC survey was fielded from June 18 to July 18 and had about 650 respondents in in-house counsel and legal operations positions. The Bloomberg Law survey was fielded from Sept. 8 to Sept. 22 and had more than 750 respondents.