How do we charge for AI-assisted work?
By 26 August 2025 via Law Gazette.
Artificial intelligence (AI) is no longer a distant concept in legal practice – it is actively reshaping how legal services are delivered and, crucially, how they are priced. Tasks that once consumed hours – document review, legal research, contract drafting – can now be completed in a fraction of the time. As these efficiencies become more embedded, the legal profession must confront a fundamental question – how should lawyers charge for work that no longer takes as long to do?
The traditional hourly billing model may come under increasing scrutiny. AI tools can now process and analyse vast volumes of data in minutes, prompting clients to question whether time-based billing still reflects value. If a task that once took ten hours now takes one, should the fee be reduced accordingly?
This shift is not just about perception. AI also enables firms to track and analyse how time is spent, offering a clearer picture of value-added work. This data-driven insight supports a move toward more transparent and outcome-focused pricing, which clients are increasingly demanding.
One of the most immediate consequences of AI-driven efficiency is the growing viability of fixed-fee arrangements. With greater predictability in task duration and complexity, firms can offer fixed pricing for services such as contract drafting or due diligence.
Clients benefit from cost certainty, while firms can maintain profitability by leveraging AI to reduce internal costs. This model also aligns with regulatory expectations around transparency and fairness in pricing.
Damages-Based Agreements (DBAs) have historically been underused due to their complexity and risk. However, AI may change that. By streamlining case analysis and improving outcome prediction, AI reduces the financial uncertainty that has traditionally deterred firms from offering DBAs.
In areas like commercial litigation and fraud, where AI can assist in assessing prospects early, DBAs may become a more attractive option for both firms and clients, particularly international clients seeking access to justice without upfront legal costs.
AI’s potential to reduce the cost of legal services could have a profound impact on access to justice. Platforms like Garfield, which offer fixed-fee support for small claims, demonstrate how AI can make legal help more affordable and accessible.
As more AI-enabled services enter the market, traditional firms may face pressure to adopt more competitive and client-friendly pricing models.
AI also opens the door to subscription-based legal services, where clients pay a monthly or annual fee for ongoing support. This model is already being trialled by firms offering automated contract review and compliance monitoring.
Value-based pricing is another emerging trend. By aligning fees with the complexity and outcome of a matter, firms can ensure that pricing reflects the true value delivered, rather than the time spent.
Transitioning away from hourly billing is not without challenges. Costs assessment in litigation proceedings are also assessed on a time spent basis and many firms still rely on time recording for internal performance metrics. Fixed fees require careful scoping, and underestimating the work involved can erode margins.
Moreover, the Solicitors Regulation Authority expects firms to be transparent about the role of AI in service delivery. Clients must understand what they are paying for, and fees must remain fair and proportionate regardless of whether the work was done by a human or a machine.
AI is not just changing how lawyers work, it is changing how they are valued. While hourly billing may not disappear overnight, the momentum is clearly toward more flexible, transparent, and client-aligned pricing models. Firms that embrace this shift will be better positioned to meet evolving client expectations and regulatory standards.
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The above information is for general guidance on your rights and responsibilities and is not legal advice. If you need more details on your rights or legal advice about what action to take, please contact a legal advisor.
