AI may bring back the billable hour for company legal teams

Companies expect AI to make their outside lawyers cheaper. But Rhett Lemmel of Integreon says it could have a surprising side effect. Some flat-fee deals may look less attractive to company legal teams, which could give the billable hour, where lawyers charge for time spent, new life.

Where discounts can leak

Corporate legal departments are pushing law firms for lower rates. Lemmel warns that a negotiated discount can vanish in practice. The article names three ways this happens:

• Excessive hours billed on a matter
• Inefficient staffing on the work
• Work that goes beyond the agreed scope

An alternative fee arrangement is any pricing deal that is not a plain hourly rate, such as a flat fee. Lemmel's view is that AI may weaken the appeal of some of these deals for corporate clients.

Related: a bid for firm data

In a separate item, at least two AI-native law firms have bid for data held by Weil Gotshal & Manges. That raises the question of whether a law firm's internal data counts as an asset and whether it can be sold to an outside buyer.

What is not known yet

The available text is a short summary, so the full reasoning behind Lemmel's view is not included. It does not say how much AI will cut costs, which fee deals are affected, or how the Weil Gotshal data question will be settled.