Gareth Walker, CEO of LEAP in the UK and Ireland
By Gareth Walker, CEO at Legal Futures Associate LEAP UK
The legal industry is undergoing a huge shift, driven by advancements in artificial intelligence (AI). While much of the focus has been on AI’s ability to enhance operational efficiency, its impact on billing practices and client relationships is equally transformative. In a sector long-dominated by traditional hourly billing, AI offers a path to new, outcome-based pricing models that benefit both law firms and clients.
For decades, the legal industry has relied on hourly billing as its primary pricing model. While this approach has its advantages, it often leaves clients feeling uncertain about the final cost of services and places a premium on the time spent over the results delivered. AI is challenging this long-standing practice by enabling law firms to shift towards value-based billing, a model that focuses on outcomes and the value delivered to clients, rather than just the number of hours worked.
One of the key benefits of AI is the increased efficiency it brings to legal processes. Tasks that once took hours, such as legal research, document review, and case analysis, can now be completed in a fraction of the time. For firms still adhering to hourly billing, this increased efficiency might appear detrimental, reducing billable hours and, subsequently, revenue. However, forward-thinking firms are overcoming this challenge by adopting value-based billing models such as fixed fees, success-based fees, and retainers, which better align with client expectations and offer more predictable costs.
Enhancing Client Relationships Through Transparency
AI-driven billing models foster stronger client relationships by providing transparency and predictability. Clients benefit from knowing upfront what they will be paying for and can better budget for legal expenses. This not only reduces anxiety around open-ended billing but also demonstrates the law firm’s commitment to delivering value, not just clocking hours. By shifting the focus from time spent to the outcome achieved, firms can offer greater client satisfaction while still maintaining or even increasing their profit margins.
AI is not just reshaping the internal operations of law firms; it is transforming how legal services are delivered and priced. By adopting value-based billing models and leveraging AI to enhance client engagement, law firms can build stronger, more transparent relationships while optimising profitability.
