Big Law’s Embrace of AI May Accelerate the End of Billable Hours

Big Law's adoption of AI tools is accelerating a shift from billable hours to flat fees, but experts warn of persistent risks from hallucinations and misuse.

Key points:

  • Law firms are increasingly embracing AI tools to automate legal tasks.
  • Experts say this could hasten the shift from hourly billing to flat fees.
  • Risks like hallucinations and improper AI use still present ethical challenges.

The growing use of artificial intelligence by Big Law firms may be a tipping point in the profession’s long-running debate over the billable hour. As firms integrate AI tools to streamline operations, experts at the ABA’s National Conference on Professional Responsibility said the economics of legal work are being reshaped—potentially in favor of flat fees and alternative billing models.

“Clients have been hoping for the death of the billable hour for decades,” said Jason D. Kreiser, a partner at McDermott Will & Emery, during a panel at the ABA’s 50th annual ethics gathering in Arlington, Virginia. “I don’t think this is the moment that it dies. But AI will push firms toward new types of payment arrangements.”

As firms adopt generative AI tools for tasks such as document review, legal research, and entity formation, the speed and predictability of those workflows are making fixed-fee structures more attractive. Hilary Gerzhoy, a partner with HWG LLC, noted that clients are increasingly receptive to fixed pricing models when legal tasks are AI-enabled and outcomes can be more easily forecasted.

However, panelists also cautioned that AI use is far from foolproof. “AI wants to make you happy,” said Michael Shea, chief information officer at McDermott. “That’s what makes hallucinations so dangerous.” These are instances where AI fabricates cases or facts—an issue that continues to result in disciplinary proceedings for attorneys who fail to verify outputs.

Josh Noffke, a legal AI strategist with Brass Tacks Consulting, emphasized that law firms are rapidly experimenting with “agentic AI”—software agents that can complete multi-step legal tasks without human intervention. “Agents are the next up and coming thing,” he said. In-house legal teams may soon rely on agents to populate contracts, conduct diligence, and synthesize legal guidance.

Despite the enthusiasm, regulatory clarity remains elusive. Kreiser said the U.S. continues to lag behind the European Union and other jurisdictions in setting clear rules for AI use. The Trump administration recently revoked President Biden’s AI Bill of Rights framework, removing what some advocates saw as a baseline for civil rights protections in the AI era.

“It’s an arms race,” Kreiser said. “The technology is moving fast. Regulation is not.”

Read the full article on Bloomberg Law

Customer Stories

See how leading enterprise in-house teams have scaled smarter with Legal.io's high-caliber flex talent.

More from Legal.io


Legal.io Newsletter - January 13, 2023 Edition #141
Legal.io Newsletter - January 13, 2023 Edition #141

Published weekly on Friday, the Legal.io Newsletter covers the latest in legal, talent & tech

Jan 13, 2023
Read More
You'll Probably Need a ChatGPT Company Policy
You'll Probably Need a ChatGPT Company Policy

ChatGPT is an AI-powered language model produced by OpenAI that was launched in November 2022 and has already gained millions of users. The original objective was for the ChatGPT to support users in their everyday activities like producing workout plans, recipes, and poems, among other personal tasks. However, the use of ChatGPT has expanded to include work-related activities. In this article, we explore how employees are using ChatGPT in their work and the potential risks this practice carries.

Apr 06, 2023
Read More
Amazon Faces FTC Antitrust Lawsuit
Amazon Faces FTC Antitrust Lawsuit

The lawsuit presents a significant threat to Amazon’s dominance in the online retail industry and is a major test of antitrust law and the FTC’s power.

Sep 25, 2023
Read More
Skilled Workers and Professionals – The EB-3 Visa
Skilled Workers and Professionals – The EB-3 Visa

This will be the final part in the survey of the EB visas, as we have already covered the EB-5 visa and the EB-4 visa is too specific to talk about generally.

Aug 19, 2015
Read More
Wall Street Banks Highlight New AI Risks in Recent Reports

Wall Street banks outline new AI risks including software hallucinations and cybercrime, emphasizing the need for robust governance to navigate these challenges.

Mar 12, 2025
Read More
Ready to hire?

Schedule a free consultation to discuss your hiring needs.

Free 15-min consultation
Legal.io Platform
5 star reviews
Hiring made smarter

Easy-to-use platform for hiring legal talent, managing spend, and optimizing your panel — plus an average savings of 50%.

Need Immediate Help?

Submit a hiring request and let our experts handle the entire process for you.