Lawyers did not always charge by the hour. Fixed fees, contingent fees, and bills for “services rendered” all preceded the hourly model's broad adoption. AI may shorten parts of legal research, drafting, and document review, but a tool's output is not a completed legal service. Scoping the task, protecting client information, checking the work, and approving advice still take professional judgment. That is the context for asking whether AI will change legal fees.
How did the billable hour become common in law?
Time tracking took hold long before generative AI. WilmerHale's account of its predecessor firm traces Reginald Heber Smith's time records from legal-aid work in the 1910s into Hale and Dorr after 1919. The records initially helped manage work and costs. The firm later used time as a basis for fees, including six-minute entries.
Adoption across the profession was uneven. A Thomson Reuters Institute history describes fixed, contingent, and unitemized fees before hourly billing became common in corporate practice by the early 1970s. Growing in-house legal departments valued a way to see how outside counsel spent time. By the 1980s, many firms also used billable hours to set lawyer performance targets.
The Supreme Court's 1975 decision in Goldfarb v. Virginia State Bar belongs in this history, but it needs precision. The Court held that an enforced minimum-fee schedule for real-estate title examinations violated federal antitrust law. It did not require lawyers to charge by the hour or establish when hourly billing became dominant.
Why has hourly billing endured?
Recording hours gives a firm a simple way to track work and calculate a fee. An itemized bill also shows a client what work was recorded. The tension is that more hours can mean more revenue even when an efficient process might serve the client just as well. Actual incentives depend on the engagement, the quality of the work, and how the firm prices it.
Hourly billing remains common, but firms also use other arrangements. In Clio's 2025 Legal Trends Report, 54% of firms in its 2024 platform data billed with both hourly and flat fees; 41% billed only hourly. These figures describe firms in that dataset, not every U.S. law practice, and they do not show what share of revenue came from either method.
What has AI changed so far?
AI tools can help prepare a draft, search a document set, or surface issues for review. Those tasks may take less time in some matters. The time to check sources, correct omissions, protect confidential information, and decide what advice to give still counts. A faster first draft does not prove that a completed matter is faster, cheaper, or equally accurate.
There is evidence of pressure on pricing, but not of a single settled outcome. In a 2026 Thomson Reuters survey, 71% of responding in-house legal professionals expected outside firms to change their commercial models as AI use grows; 28% of responding law firms said they had already changed pricing in response to AI. These are expectations and reported actions among survey respondents, not a measured reduction in legal fees or proof that hourly billing is ending.
What would a fair comparison measure?
Consider a hypothetical contract-review matter. A lawyer agrees to deliver a report identifying specified risks. In one workflow, people perform the first pass; in another, an AI tool suggests issues and draft language. To compare them fairly, keep the document set, scope, and quality standard the same. Count intake, tool setup, lawyer review of both flagged and overlooked clauses, corrections, final approval, and any tool expense.
If AI shortens the first pass but creates extra checking or errors, the total result may differ from the first-pass time alone. No number of associates, weeks, or hours is assumed here. The comparison would need actual matter records and a way to judge the quality of the final report. Our legal workflow article describes why review belongs inside the process.
How should firms charge for AI-assisted work?
The ABA's Formal Opinion 512 says lawyers who bill by the hour must charge for actual time, including reasonable time spent prompting a tool and checking its output. They cannot bill for hours a tool saved. The opinion also says fixed or contingent fees must be reasonable, and lawyers should explain the basis for AI-related charges. It interprets ABA Model Rules; the applicable jurisdiction's rules and the client agreement also matter.
A firm might keep hourly billing, agree on a fixed fee for a defined task, or use different arrangements for different work. None follows automatically from adopting AI. Firms and clients can ask what deliverable is promised, who checks it, how actual lawyer time and tool costs are recorded, and whether the agreed fee reflects the work and responsibility involved. For the broader professional context, read why lawyers need to understand AI.
The history of the billable hour explains why time became a measure of legal work. The effect of AI on any particular fee depends on evidence from the whole matter, the quality of the result, and professional obligations. Infinite Counsel explores those questions in greater depth.
