Extract from Nicole Black’s article “Will AI Disrupt the Billable Hour?”
Legal technology experts have long predicted the death of the billable hour. The prevailing belief was that efficiency gains driven by technology adoption along with an increasingly competitive legal marketplace would necessarily result in the implementation of alternative fee structures. Yet, despite decades of sophisticated technological advancements, hourly billing has proven remarkably resilient.
AI’s Disruptive Potential
However, with the rise of generative artificial intelligence (AI), that may finally change.
By offering unparalleled efficiency and robust data analytics capabilities, generative AI promises to disrupt traditional billing models in ways that previous technologies could not. Efficiency gains combined with AI’s ability to analyze vast amounts of practice management data in real-time may force a transition to value-based outcomes, leading to a fundamental change in the pricing and delivery of legal services.
This shift would benefit both law firms and clients. By moving toward a pricing model that prioritizes results over hours billed, firms can offer more transparent and predictable pricing structures, improving client satisfaction. Additionally, value-based billing increases access to justice by making legal services more affordable.
