Keep The Hour, But Give Clients More ‘For Free’ – Artificial Lawyer

Most commercial law firms sell their work in terms of time taken. Meanwhile, AI tools reduce that time. You can see the fundamental problem here. If we don’t fix this, legal AI could remain at the fringes. But, there may be a solution: give clients more ‘for free’.

Accepting The Hour…? Really?

Now, if you’ve read Artificial Lawyer over the last nine years then you know that this site has been campaigning for the end of using time to denominate legal value when automation technology is applied to that work.

It was obvious – even in 2016 – that if you sell something by the time it takes you to do it, and the buyer is evaluating your output on all of those minutes, hours, and days, and the seller’s hope is to have as many minutes, hours and days as acceptable….then how can AI and automation in general ever have a fully systemic impact if that technology shortens that timespan and hence makes the firm less money? I.e. firms will do all they can to make sure AI is never applied wholeheartedly, because…why would they drive real change with such a system?

While this site has been grappling with the dilemma of these mutually exclusive patterns, one solution emerged: using scoped and fixed fees instead, at least for all but the most complex, super-high importance, open-ended workflows, e.g. M&A negotiation on a major deal, where humans still rule in nearly every aspect. That way, tech-delivered speed is a bonus not a detriment to the firm.

And this site has proposed the same many times. But, there has been a problem.

Large commercial law firms tend not to like fixed fees. They’re a royal pain in the proverbial, to put it simply. One minute your team is charging along billing time as usual, then the next you have a chunk of work – which is part of the same matter – that’s a fixed fee. It’s confusing. It’s difficult to manage. It changes the risk-reward formula for the lawyers, i.e. the client externalises risk to the law firm, but swallows the financial risk of an open-ended bill – that’s the Big Law trade off.

Likewise, despite what some GCs may say, the clients are still tightly holding on to the historical – (albeit only since the 1980s when it came into popular use) – method of evaluating the quality of legal work by the total time put in. Even if this is illogical in a world now saturated with technology. E.g. is a pocket calculator’s answer less correct, less valuable to the user, because it is produced in milliseconds?

After all, it usually takes both the buyer and seller to sustain a market culture. We can’t just blame the law firms. In fact, if it were just law firms perpetuating this then change would be easier. But, it’s both sides of the buyer-seller equation keeping the time barrier alive.

So, what’s the answer? It’s this:

Law firms should give their clients more work product for ‘free’. A lot more.

Give Freely What Should be Free

OK, let me explain.

All law firms give ‘work’ away for free all of the time. They do unbillable initial calls with clients. They do responses to RFPs. They do preliminary research that the client doesn’t want to pay for. They even accept a world where they will see 20% to 30% of their billable time written off by the client…..which really is nuts…but they accept it as normal. They even send junior associates over to some of their top clients to work ‘for free’, in what is called a ‘value added’ deal – designed to keep the client onside, but strictly speaking is the law firm doing free work.

So, the concept of providing ‘work for free’ is not new by any means. All that needs to change is a widening of the basis for doing so.

On what basis should it be given away?

Well, if a week of due diligence work can now – with some layers of human expert supervision – be crushed into a few hours, then what is the point in charging for it?

If research using AI tools – which can be done just as well now and easily by the client – also only takes a fraction of the time……or drafting basic documents…….or providing via genAI the kind of legally adjacent work that isn’t really legal work, e.g. ‘Can you tell me what this new EU AI Act means in general?’, and so on, then what is the point in charging for it? If demanding you charge for it sets the goal of time-based billing and the use of legal AI at loggerheads and impedes innovation, is it really a sensible business strategy?

In a world where (and I have seen the actual numbers….) a global law firm may write off $100s millions per year in time-based fees because the clients didn’t want to pay for those minutes, hours, days…..what is the problem in handing over some work that has already – as far as most of the market can see – become insignificant in terms of time-based value if you use AI to get it done?

Am I saying that law firms should just not bill for significant quantities of work they do for clients (where AI is predominantly used)? Yes, that’s exactly what I am saying.

Consider this: many industries make great profits and give away plenty of things that are not on the bill.

The Restaurant Billing Theory

You go for a nice meal in the centre of town. The food is good, although perhaps not memorable. But, even so, the service is great, the décor is nice, and you can tell the owners have really made an effort to make their customers happy. You will keep coming back.

The bill arrives and it’s definitely on the pricey side, but you pay it with a quick look at your purchases, which include each food and drink item, and as it’s in the UK, there is no tip as such, just an automatic 15% ‘service charge’ added.

OK, all well and good? On the way home you consider that on that itemised bill there was no mention of: the staff, the cutlery and plates and dishes, the lighting, air conditioning, the kitchen equipment, the training that the restaurant has paid for to bring its staff up to a high level, the carpets (which were very nice), the chap who opened the door, and so on.

‘How strange,’ you note, ‘they gave away all of those things for free. What an incredible way to run a business, just charging us for the food and drink!’

Of course, they didn’t. Every single cost the restaurant has accumulated you have paid for in that bill. It’s just that you believe you primarily paid for the food, because that was on the bill. But, that is an illusion.

And the same is true for the billable time of a law firm. Everything that is a cost to that law firm, even the flowers in the reception area, form an element of the bills they send out. That bill of £100,000 is actually paying for dozens of additional things on top of the actual time spent by the lawyers on that matter. In fact – and it’s hard to guess – but, the actual legal work cost, i.e. the part of the bill that directly went as salaries to the associates who did 99% of that work, is a fraction (albeit sizable one) of the whole.

So, once again, law firms and their clients are already used to this world. They already operate in the ‘restaurant way’ of items on a bill which in fact represent a much greater range of things, while apparently giving away ‘for free’ a whole range of services.

Now, the next logical step. If all of the above is true….and it is. Then we can extend this to include all of the work that is going to be automated, or largely automated, in the coming decade.

The end result is that law firms will be giving away plenty of work output, or rather far more than they do already.

Show Us The Money…!

Law firms are private businesses. They are not charities. Their owners have every right to make as much money as possible and if the clients are happy, then what’s to complain about?

And thus, any significant change to the business of law will only happen for two reasons: 1) there is a burning platform and in order to retain the profits they are used to, law firms have to disrupt their own models – and 2) the opportunity to make even more profits is so large that they just have to take the opportunity, (also, if they don’t, their top talent will leave for the firms that do take the plunge and end up making higher profits.)

So, let it be stated here: the goal has to be for commercial law firms to make at least as much as they do now, and hopefully more – otherwise AI is never going to make a difference at a truly systemic level.

And, as explored, any change is also held back by the deeply connected point that AI makes you finish a job faster, so time-based billing for ‘all of the job’ just makes you poorer. QED – today AI is used, but kept to the less profit-sensitive fringes of a firm, i.e. it just can’t get through the VIP door into the part of the firm’s work where the real money is made.

But…even with this aspect there is a complication. As noted, law firms don’t really want to use fixed fees and clients don’t like them much either. So, the heart of the issue is this: work that should not be on the hour remains on the hour. And that kills off real innovation and change.

The Answer

So, to conclude, the answer is this: it’s a triage issue. Look at the work you do and consider what is (and soon enough will be) highly automatable – with of course a human lawyer quality / sense checker.

Next designate this as free work, i.e. the client won’t be directly charged for it, no more than your favourite restaurant directly charges you for the plates, the knives and the forks.

What happens next is where it gets even more interesting.

Two main options:

A) keep the hourly rates for everything else exactly the same. ‘But, we’ll make less money,’ you say. Probably not. With the bulk of your ‘routine but complex’ work semi-automated, or mostly-automated, you will be able to complete matters so much more quickly the firm will be able to take on many times more matters than in the past with the same running costs. (There are also options to slim down the junior associate ranks, as leverage multiples based on time for routine work won’t be so necessary, so costs will reduce. I.e. so associate leverage moves from let’s say today is 5:1 (associates per equity partner) to 4:1, but the same or higher total revenue is gained as the productive output of the firm is now higher. Hence higher profits per partner.)

B) Much the same as above, but you also start to add a special premium to the billable work, especially that performed by the most experienced – and hence valuable – partners. This adds an extra increase in profits to the firm, if it has the kind of partners that clients really will pay extra for. In fact, in many segments of the market it’s likely that some of the leading experts in the field could 10X their chargeable rates and the clients would not even blink. Meanwhile, the clients – as they use the same AI tech inhouse as the firms – would expect, let’s say 40% for now (based on historic human labour + time models), of the work to be provided for free. That model produces even more profit.

(A note on Small Law that may be embracing fixed fees. They need to stick with it. Why? Because the average consumer and very small business doesn’t use lawyers much, just wants it done fast and well enough, and sees 1,000 competitors on Google that all look the same. They can’t offer a big part of their work for free in the same way that Big Law could, as there is little to advance into that can use the ‘luxury’ billing model of time. Also, if 90% of your fees are fixed, then the faster you move the more money you make. Now some may say that will commoditize their work….well, here’s a fact, it’s already been commoditized.)

So, to wrap up, if Big Law won’t give up the hour because it’s now in its DNA, then maybe they’ll have to keep it….but, not for everything.

The way ahead is instead to look at giving away as much work as possible where AI and its automation abilities are at the heart of it.

And as noted, this approach will meet law firm partners’ number one requirement: they will make more money. Meanwhile the clients don’t have to concern themselves with evaluating opaque fixed fees, and can keep paying for time-worked, but get a ton of AI-driven stuff ‘for free’. What’s not to like?

Plus, the legal AI companies finally can operate in a market where there are far fewer structural barriers to the systemic roll-out of their technology, only being held back where there are really genuine reasons for not using it.

To free the legal AI, start giving clients more for free.

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Richard Tromans, Founder, Artificial Lawyer and TromansConsulting

July 2025

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[ Holiday note: Artificial Lawyer will be on editorial holiday from July 13 for two weeks, coming back on July 28. ]

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