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.”
