AI will not kill the billable hour, it will reinvent it

Several attorneys said that as AI tools are used at firms to automate routine and time-consuming tasks such as document review and due diligence, the number of billable hours for a client is likely to be reduced and the value of a lawyer’s individual hour. is likely to increase.

“The real value that lawyers provide, whether or not it’s strategic advice, whether or not it’s actually drafting arguments, whether or not it’s arguing in court to jurors or judges in courtrooms, or closing of agreements and negotiations. — all those types of things — I think you’re going to see premium growth,” said Michel Paradis, partner at global firm Curtis, Mallet-Prevost, Colt & Mosle LLP.

Paradis, who specializes in legal work related to artificial intelligence and also teaches national security and constitutional law at Columbia Law School, said he doesn’t think there will ever be a “complete disappearance” of the billable hour in the legal profession.

“What I think you’re probably going to see is a slow demise of billable fill-in hours,” which a lot of law firms depend on, Paradis said.

In the same way that the introduction of word processors dramatically changed the way law firms operated in the late 20th century, Paradis said he foresees the same happening with AI.

“AI will have a similar effect to the rise of information technology in the legal field,” Paradis said, “and that’s a steady gobbling up of the legal market.”

Elisa Botero, another partner at the New York-headquartered firm, agreed, saying the billable hours model will remain a “key metric” for at least the foreseeable future, even as more law firms move toward using AI tools to increase their efficiency. practices.

“But what type of work is going to be billed will change and is already changing,” Botero said, explaining that more traditional, associate-type or junior-level work will be most affected by the use of AI.

“You’re still going to see billable hours, but you’re going to see a reduction in those billable hours for that kind of routine legal work that can be automated” with AI tools, Botero said.

AI cannot replace everything a lawyer does

James Gatto, a partner at Sheppard Mullin who co-leads the firm’s AI industry team of about 100 lawyers, said billable hour isn’t going anywhere for higher-level work, but there could be flat-rate pay. for legal services that are mainly performed by AI.

“If you’re using AI to produce a draft of a brief that would have taken, say, $5,000 of legal time to do a first draft, maybe now it’s $2,500,” Gatto said.

He added that AI “might accelerate the elimination or minimization of billable hours for certain types of work, but I don’t think it will across the board.”

“Not everything a lawyer does can be replaced by artificial intelligence,” the lawyer said, pointing to legal work involving depositions, trials, negotiations and mediations.

Frank Gerratana, a partner at the international firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, said he sees the integration of artificial intelligence tools in law firms as a positive that can allow lawyers to spend more time in critical activities.

“I can imagine a scenario where lawyers can simply charge more per hour because they spend more time on the highest-value work, and the time-consuming – but not very valuable – things can be automated,” said Gerratana, who advises clients on intellectual property matters.

With the integration of artificial intelligence into law firms, Gerratana said he can envision a world where hourly billing, subscription-based billing and task-based billing for legal services all exist at the time.

“If I, as a lawyer, can speed up my work, I might be more inclined” to bill according to the task, he said.

A 2023 ABA survey found that 20% of law firms were using or considering using artificial intelligence

Meanwhile, a 2023 survey by the American Bar Association found that 10.9 percent of firms of all sizes were using AI tools in their practices, while 9.8 percent were seriously considering purchasing AI tools.

Gatto said his firm uses a custom AI tool that was developed in-house. The tool can be used to draft legal memoranda and memos and create initial agreements of all types.

“Virtually any type of legal document, you can use AI to some degree, at least now, to help create a first draft,” Gatto said.

Despite using AI, Sheppard Mullin still charges clients by the hour.

“The part that’s done by AI, we’re still only uploading every hour. If it takes five minutes, we bill for five minutes, that’s it, but none of that stuff is ready to go to the customer,” Gatto said, explaining that an initial draft of an AI-created document would be comparable to the work of a first-year law student.

“There’s still a fair amount of work to do between partner and first year to get the grade to the point where it’s taking everything into account and ready to go to a client,” Gatto said.

Firms Curtis and Mintz are still in the pilot phase when it comes to using AI in legal work.

“Any law firm that is not currently investigating how to use AI tools in their practice will quickly fall behind the law firms that have figured it out,” Gerratana said.

Juan Perla, another partner at Curtis, said the firm is in the midst of developing an internal AI policy and expects to have some AI tools integrated into the practice within months.

“While we are proceeding with caution, we are very intentional in our plan to move forward,” Botero added. “We feel these tools will be needed.”

Richard Robinson, CEO and founder of legal tech startup Robin AI, which uses the Claude Anthropic language model to help lawyers draft and edit contracts, told BI that tools like his allow lawyers to operate at peak.

“We’re not just revolutionizing the legal industry. We help businesses grow,” Robinson said. “We’ve helped companies do legal due diligence 10 times faster than they could without our technology.”

“We help companies reduce the time it takes to negotiate contracts from 90 days to seven in some cases,” he said.

According to Robinson, Robin AI, which was founded in 2019, has 100 paying customers, including seven Fortune 500 companies, as well as thousands of users using a free version of the product.

“We’ve had tremendous demand since the launch of ChatGPT,” he said.