AI Is Accelerating the Demise of the Billable Hour - Here’s Why That’s Good for Law Firms
This post explores how AI is reshaping the economics of law by accelerating the decline of the billable hour. Citing recent insights from Bloomberg Law and legal industry leaders, it explains how AI empowers law firms to adopt alternative fee models, improve operational efficiency, and deliver greater value to clients.
AI Is Accelerating the Demise of the Billable Hour—Here’s Why That’s Good for Law Firms
In a profession long dominated by the billable hour, the rise of artificial intelligence (AI) is forcing a fundamental rethink of how legal services are priced, delivered, and valued. And that shift is accelerating faster than many expected.
A recent Bloomberg Law article highlights this transformation, citing Big Law leaders who say that AI adoption is pushing firms toward flat fees and alternative billing models—changes long requested by corporate clients.
“Firms are readily accepting flat fees… as they try to stay profitable while they assimilate AI tools,” said Hilary Gerzhoy, partner at HWG LLC.
Simply put: AI is making the billable hour look obsolete.
Why the Legal Business Model Is Evolving
Traditionally, the billable hour rewarded inefficiency and discouraged innovation. But as AI automates tasks like:
- Document review
- Contract drafting
- Legal research
- Entity formation
…it becomes harder for firms to justify billing by the hour for work that now takes minutes.
The result? A growing appetite for value-based pricing models—ones that reward outcomes, not effort.
“This may not be the moment that the billable hour dies,” said Jason Kreiser of McDermott Will & Emery, “but AI will spur new types of payment arrangements.”
That’s not just a pricing conversation—it’s a business transformation.
AI Is Not Just Smarter. It’s Strategic.
While AI still comes with risks—like hallucinations or improper usage—its ability to handle repetitive legal workflows is undeniable. More importantly, it’s creating leverage:
- For law firms: to reallocate time toward higher-value client advisory work
- For clients: to receive faster, more predictable legal service at a lower cost
- For the legal industry: to rethink profitability beyond hours logged
Firms that embrace AI are gaining a competitive edge not only in productivity but in how they align with client expectations around transparency and value.
Enter Agentic AI: The Next Frontier
The Bloomberg article also points to the rise of agentic AI—intelligent software that can complete tasks, make decisions, and evolve with context.
“Agents are the next up and coming thing,” said AI strategist Josh Noffke.
These tools won’t just assist lawyers—they’ll act on their behalf within defined workflows. For law firms, this opens automation opportunities in:
- Matter intake
- Compliance monitoring
- Conflict checks
- CRM data cleansing
- Proactive legal alerts
The implications go far beyond cost savings. They touch business development, relationship management, and long-term strategic positioning.
Final Thought: AI Isn’t Replacing Lawyers—It’s Replacing Outdated Models
The legal industry doesn’t need to fear AI. It needs to reframe how it defines value.
“This is a new arms race,” said Michael Shea, CIO at McDermott Will & Emery.
The firms that thrive will be the ones that use AI not just to cut costs—but to build smarter, more client-centric businesses.
Want to see how AI can modernize your law firm’s operations?
At Postilize, we help professional services firms apply AI to CRM hygiene, outreach automation, and relationship intelligence—unlocking new value far beyond the billable hour.
Low-code tools are going mainstream
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Multilingual NLP will grow
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Combining supervised and unsupervised machine learning methods
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Automating customer service: Tagging tickets and new era of chatbots
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Detecting fake news and cyber-bullying
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AI Is Accelerating the Demise of the Billable Hour—Here’s Why That’s Good for Law Firms
In a profession long dominated by the billable hour, the rise of artificial intelligence (AI) is forcing a fundamental rethink of how legal services are priced, delivered, and valued. And that shift is accelerating faster than many expected.
A recent Bloomberg Law article highlights this transformation, citing Big Law leaders who say that AI adoption is pushing firms toward flat fees and alternative billing models—changes long requested by corporate clients.
“Firms are readily accepting flat fees… as they try to stay profitable while they assimilate AI tools,” said Hilary Gerzhoy, partner at HWG LLC.
Simply put: AI is making the billable hour look obsolete.
Why the Legal Business Model Is Evolving
Traditionally, the billable hour rewarded inefficiency and discouraged innovation. But as AI automates tasks like:
- Document review
- Contract drafting
- Legal research
- Entity formation
…it becomes harder for firms to justify billing by the hour for work that now takes minutes.
The result? A growing appetite for value-based pricing models—ones that reward outcomes, not effort.
“This may not be the moment that the billable hour dies,” said Jason Kreiser of McDermott Will & Emery, “but AI will spur new types of payment arrangements.”
That’s not just a pricing conversation—it’s a business transformation.
AI Is Not Just Smarter. It’s Strategic.
While AI still comes with risks—like hallucinations or improper usage—its ability to handle repetitive legal workflows is undeniable. More importantly, it’s creating leverage:
- For law firms: to reallocate time toward higher-value client advisory work
- For clients: to receive faster, more predictable legal service at a lower cost
- For the legal industry: to rethink profitability beyond hours logged
Firms that embrace AI are gaining a competitive edge not only in productivity but in how they align with client expectations around transparency and value.
Enter Agentic AI: The Next Frontier
The Bloomberg article also points to the rise of agentic AI—intelligent software that can complete tasks, make decisions, and evolve with context.
“Agents are the next up and coming thing,” said AI strategist Josh Noffke.
These tools won’t just assist lawyers—they’ll act on their behalf within defined workflows. For law firms, this opens automation opportunities in:
- Matter intake
- Compliance monitoring
- Conflict checks
- CRM data cleansing
- Proactive legal alerts
The implications go far beyond cost savings. They touch business development, relationship management, and long-term strategic positioning.
Final Thought: AI Isn’t Replacing Lawyers—It’s Replacing Outdated Models
The legal industry doesn’t need to fear AI. It needs to reframe how it defines value.
“This is a new arms race,” said Michael Shea, CIO at McDermott Will & Emery.
The firms that thrive will be the ones that use AI not just to cut costs—but to build smarter, more client-centric businesses.
Want to see how AI can modernize your law firm’s operations?
At Postilize, we help professional services firms apply AI to CRM hygiene, outreach automation, and relationship intelligence—unlocking new value far beyond the billable hour.
For our views on the future of building strong client trust and relationships, read our blog
