Despite the ongoing buzz surrounding artificial intelligence and its transformative potential across industries, the latest data shows that law firms are yet to translate those advancements into meaningful cost savings for their clients. A recent survey released by the Association of Corporate Counsel (ACC) found that while AI tools are increasingly being adopted in legal operations, their use has done little to reduce the number of billable hours charged by outside law firms.
Clients See Minimal Impact from AI
According to the ACC’s findings, nearly 60% of in-house counsel reported seeing no significant cost reductions linked to AI implementation in their outside law firms. Among respondents who did identify benefits, only 13% said they noticed fewer billable hours, while roughly 20% cited faster turnaround times on legal matters. The results highlight a growing disconnect between AI’s technological promise and its practical effect on law firm billing practices.
Analysts suggest that one of the key reasons for the lack of visible cost savings is that law firms are still experimenting with how to price services involving AI. Many are unsure how to charge clients when AI systems complete tasks—such as legal research, document drafting, or contract analysis—in a fraction of the time it would normally take an attorney. As a result, instead of lowering client costs, firms may simply bill traditionally while using AI internally to increase their own efficiency and profit margins.
“Both firms and clients are still feeling out the right balance between efficiency and billing models,” said Weston Wicks, a legal industry analyst at Gartner. “Until that structure is standardized, clients are unlikely to see a direct reduction in what they pay.”
Early Days for AI in Law
While many law firms have started experimenting with generative AI platforms such as OpenAI’s ChatGPT, Harvey AI, and other legal-specific tools, their actual day-to-day integration remains limited.
The ACC survey paints a similar picture: more than 60% of respondents said it’s still too early to determine whether AI will bring measurable financial benefits to clients. Most believe that the technology’s true impact will emerge over the next several years, once law firms adopt consistent AI policies, training, and billing standards.
Nonetheless, interest in AI across the legal field is surging. Firms are using these tools for contract review, due diligence, e-discovery, legal research, and drafting memos. Corporate legal departments, meanwhile, are exploring AI to manage workflows, automate compliance tasks, and improve document management systems.
The Rise of In-House Legal AI
Another key takeaway from the ACC report is that corporations are increasingly using AI to perform more legal work internally—potentially reducing their reliance on outside counsel altogether. About 64% of surveyed in-house legal teams expect to handle more legal work in-house in the coming years, thanks in part to the efficiencies AI offers.
This shift could mark a major turning point in the traditional relationship between law firms and their corporate clients. As AI empowers legal departments to automate low-risk or repetitive tasks, outside counsel may be left with a smaller portion of the work, primarily handling complex litigation or specialized regulatory matters.
Veta Richardson, outgoing CEO of the ACC, commented that clients will likely drive this transformation. “Law firms may not reinvent themselves overnight,” she said, “but corporate clients are already demanding more value and accountability. That pressure will eventually force firms to adapt their pricing and staffing models.”
Client Pressure Mounts for Pricing Reform
Corporate legal teams are increasingly formalizing their expectations when it comes to how law firms use AI. Several companies have begun inserting AI-related clauses into their outside counsel guidelines, stipulating that law firms should use AI for lower-risk or repetitive work—and that any resulting efficiency should translate into reduced billing.
This trend poses a challenge to the traditional hourly billing model that dominates most law firms. While AI has the potential to streamline hours of document review into minutes, firms risk losing revenue if they can’t adapt their fee structures. Industry experts predict that alternative fee arrangements (AFAs)—including flat fees, success fees, or subscription-based billing—could become more prevalent as a result.
“AI is not just changing how lawyers work—it’s going to change how they get paid,” said one survey respondent from a major U.S. law firm. “Clients won’t accept paying the same rates if AI does the heavy lifting.”
Looking Ahead
As law firms continue to experiment with AI, experts predict that real transformation will depend not only on technology adoption but also on how firms choose to evolve their business models. Firms that embrace transparent pricing, prioritize client value, and invest in AI literacy may gain a competitive advantage in the years ahead.
However, until then, billable hours—the cornerstone of law firm economics—are likely here to stay.
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