The AI-Driven Client Revolt That Could End Hourly Billing

Here is my recent Daily Record column. My past Daily Record articles can be accessed here.

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The AI-Driven Client Revolt That Could End Hourly Billing

Hourly billing has long been the bane of existence for many lawyers. Painstakingly logging work by tenths of an hour is a far cry from the network television courtroom cross-examinations that lured us to the practice of law. As young law students, we envisioned dramatic wins and spectacular press conferences, not entering line items that track every mundane task completed.

The billable hour is unpopular not just because it’s tedious but because it’s a terribly ineffective way to work. The model inherently discourages legal professionals from working efficiently, much to the consternation of legal clients, who would prefer predictable legal fees based on productive outcomes rather than unnecessarily prolonged workflows. 

No one likes hourly billing, which is why alternative fee arrangements (AFAs) gradually became more common. Clients preferred them, and lawyers were relieved of the stressful burdens placed on them by the billable hour model. 

Unfortunately, despite their many benefits, AFAs never fully caught on. After all, the practice of law is precedent-based. Lawyers look to the past to plan for the future, and as a result, can be slow to embrace change.

When technological innovations ushered in new ways of doing work, it seemed that AFAs might finally come of age. But even with the conveniences, flexibility, and streamlined workflows offered by online software and remote work, hourly billing continued to prevail.

Enter generative artificial intelligence (AI), which supercharged the completion of mundane tasks like document summary, analysis, and drafting. At long last, the billable hour’s death knell would finally be heard!And yet, three years after ChatGPT’s debut, the billable hour is still clinging to life.

That may not hold true much longer. New data suggests that the end may finally be near, and in-house counsel may be the ones steering hourly billing towards its long-awaited sunset.

The data can be found in a report titled “Generative AI’s Growing Strategic Value for Corporate Law Departments,” which was released earlier this month by Everlaw and the Association of Corporate Counsel and Everlaw.

In it, corporate counsel respondents, tech-savvy legal consumers, shared how AI was impacting their perception and use of outside legal services. They described how AI was shaping their expectations about the work and pricing of services provided by law firms, with 61% reporting that they were “somewhat” or “very” likely to question law firm pricing models. That same percentage of respondents was also interested in new delivery and pricing models.

Another notable trend was that legal departments' use of AI tools had increased by nearly twofold year over year, up from 23% in 2024 to 52% this year. With AI-powered efficiencies on the rise, legal teams were able to handle more work in-house, thus reducing their reliance on outside counsel. The end result was that 64% of respondents planned to rely less on outside counsel in the coming year.

They also planned to handle certain types of legal work internally more often, including drafting (78%), contracts (71%), legal research (62%), litigation (29%), and M&A work (29%). Additionally, a key task they planned to outsource less frequently over the next three years was contract drafting and negotiation (82%). 

In other words, the writing is on the wall: the billable hour may soon fade into oblivion. Lawyers have long resisted change, but in today’s fast-paced, AI-powered world, resistance is futile. The combined pressure of technological innovation and increasingly savvy clients may finally push the profession past the point of no return. 

In-house counsel are leading the way, demanding more efficient, transparent, and practical legal work. Other sophisticated legal consumers, like insurance companies, will follow as AI continues to make legal work faster and more cost-effective. Clients of all stripes will soon expect pricing that reflects outcomes and efficiency, not hours on a timesheet. When that happens, the billable hour won’t stand a chance.

Nicole Black is a Rochester, New York attorney, author, journalist, and Principal Legal Insight Strategist at 8am, the team behind 8am MyCase, LawPay, CasePeer, and DocketWise.She is the nationally-recognized author of "Cloud Computing for Lawyers" (2012) and co-authors "Social Media for Lawyers: The Next Frontier" (2010), both published by the American Bar Association. She also co-authors "Criminal Law in New York," a Thomson Reuters treatise. She writes regular columns for Above the Law, ABA Journal, and The Daily Record, has authored hundreds of articles for other publications, and regularly speaks at conferences regarding the intersection of law and emerging technologies. She is an ABA Legal Rebel, and is listed on the Fastcase 50 and ABA LTRC Women in Legal Tech. She can be contacted at niki.black@mycase.com.