{"id":165870,"date":"2026-10-23T12:23:17","date_gmt":"2026-10-23T20:23:17","guid":{"rendered":"https:\/\/xira.com\/p\/2026\/10\/23\/ai-not-only-failed-to-kill-the-billable-hour-its-looking-like-its-bodyguard\/"},"modified":"2026-10-23T12:23:17","modified_gmt":"2026-10-23T20:23:17","slug":"ai-not-only-failed-to-kill-the-billable-hour-its-looking-like-its-bodyguard","status":"publish","type":"post","link":"https:\/\/xira.com\/p\/2026\/10\/23\/ai-not-only-failed-to-kill-the-billable-hour-its-looking-like-its-bodyguard\/","title":{"rendered":"AI Not Only Failed To Kill The Billable Hour, It\u2019s Looking Like Its Bodyguard"},"content":{"rendered":"

It really seemed like we had the billable hour on the ropes. <\/p>\n

You didn\u2019t need to buy the most extreme threads of artificial intelligence hype to think the technology would at least take a modest bite out of hourly work and leave attorneys either agreeing to accept less money \u2014 ha \u2014 or shift to a value-based billing regime to keep the gravy train rolling. <\/p>\n

But the hours haven\u2019t really gone down. <\/p>\n

The latest SMB Law Billing and Payments Report<\/a>, drawn from more than 60,000 small and mid-size firms using 8am<\/a> products MyCase and LawPay, reveals that the flat-fee revolution has not only failed to materialize, but the industry actually went into reverse. Flat fees made up 15 percent of all bills sent, which is down from 16 percent a year ago. That\u2019s not a huge retreat, but with AI adoption numbers surging, the fact that flat fees aren\u2019t headed to the moon suggests that the technology isn\u2019t having the impact we expected. Nearly half of firms still bill entirely by the hour, while only one in ten billed purely on flat fees. Firms with 11 or more employees cut back on flat fees the most, sliding from about 16 percent to 14 percent.<\/p>\n

The report doesn\u2019t bury the lede:<\/p>\n

\n

For most of the past decade, the legal industry has been predicting a shift away from the billable hour, because clients want predictability. The data showed firms making a different choice.<\/p>\n<\/blockquote>\n

It wasn\u2019t just predictability. Lawyers can\u2019t bill for time that doesn\u2019t happen (well, they can, it\u2019s just an ethical violation\u2026), so we assumed the time had finally arrived for the billable hour to disappear. So what\u2019s going on?<\/p>\n

Back in March, the 8am 2026 Legal Industry Report<\/a> found individual generative AI use more than doubling to 69 percent, with a majority of users reporting that the tools saved them hours every week. At that point, 22 percent of respondents predicted a broader move to flat fees. Then in July, 8am\u2019s billing data showed hours per case climbing<\/em><\/a> in nearly every practice area.<\/p>\n

Those reports drew from different pools, but that\u2019s a genuine disconnect. Lawyers answering surveys believe they\u2019re saving time, and the software compiling billable hours is here to say, \u201cno, you aren\u2019t.\u201d While clients whine about wanting time savings passed on to them, it\u2019s time to confront the fact that AI \u2014 at least as it presently exists \u2014 does not save time across a matter.<\/p>\n

Sure, it can turn out a first draft in seconds, but then a human lawyer has to spend a good chunk of the afternoon making sure the cited cases actually exist<\/a>, say what the AI claims they say, and haven\u2019t been overruled. <\/p>\n

But the less cynical issue is that AI doesn\u2019t do the work faster so much as finds more of it. Ask an AI tools to pressure-test an argument, and it\u2019s handing back three angles the lawyer hadn\u2019t thought of, and two lines of cases that would never have been pulled because there wouldn\u2019t have ever been time. A Biglaw team has always had the resources to hurl bodies into a brainstorm like that, but for someone working alone or with a lean team, these tools are opening up work that couldn\u2019t be done before.<\/p>\n

Human<\/em> work that couldn\u2019t be done before.<\/p>\n

This is what Jevons paradox looks like for law. When steam engines got more efficient in the 19th century, William Stanley Jevons noticed Britain actually burned far more<\/em> coal than before. The availability of cheaper travel made finding new uses for the fuel worth pursuing. Make it cheaper to explore a research avenue and lawyers explore more research avenues.<\/p>\n

The report doesn\u2019t dive into the AI aspect of flat fees, opting for a more straightforward explanation:<\/p>\n

\n

Before choosing between flat fee and hourly, consider whether a given matter is predictable and bounded enough to price up front. If it is, a flat fee makes sense. If it isn\u2019t, hourly protects the firm.<\/p>\n<\/blockquote>\n

But that\u2019s still an AI issue. If AI does what its most enthusiastic supporters swear it does, it compresses time spent on the matter and allows firms to cut back on expenses \u2014 and if the firm is able to do both of those things, it provides reliable baseline pricing data. Practice areas are all not created equal, but the promise of AI included smoothing out costly unpredictabilities.<\/p>\n

Instead, AI is kicking up work lawyers didn\u2019t have the luxury of pursuing before. Having a tireless idea generator just makes the scope of every engagement bigger.<\/p>\n

Billing per month grew 5 to 8 percent across firm sizes, and three of the four sizes didn\u2019t raise their hourly rates at all. That means the growth came from lawyers billing more. That doesn\u2019t necessarily<\/em> mean the lawyers are working more. It could just be capturing more worked time that went unbilled in the past. Firms with 11-plus employees billed nearly 12 percent more hours while logging fewer, pushing the share of tracked time that made it onto a bill from 44 percent to 49 percent. But at least some of that reflects time lawyers used to leave off the bill because they felt it wasn\u2019t truly productive time, and they now seem to believe it\u2019s worth billing.<\/p>\n

Since this is a vendor\u2019s data about its own customers, it\u2019s \u201cnot representative of every law firm in the U.S. legal market.\u201d But that also means it\u2019s showing what\u2019s happening at a group of firms that have self-selected into technology. <\/p>\n

And the trend is showing up at the other end of the market too! Citi found demand for Biglaw lawyers\u2019 time grew 4.2 percent in the first half of the year, nearly triple the normal pace. As Bloomberg Law\u2019s<\/em> Roy Strom<\/a> put it, \u201cClients insist that AI is saving time on legal work. And yet, they are paying for more hours than ever.\u201d<\/p>\n

You\u2019ve got to hand it to the billable hour. We invented a technology that put an ethical barrier on the billing model and it managed to come out as powerful as ever.<\/p>\n

SMB Law Billing and Payments Report<\/a> [8am]<\/p>\n

Earlier<\/strong>: Small Law Firms Billing More Hours Per Case \u2014 The Opposite Of What AI Promised \u2014 But At Least They\u2019re Getting Paid!<\/a>
Law Firms Prepare To Automate Themselves Out Of Their Own Business Model<\/a>
Billable Hour Dying So Slowly, You\u2019d Think It\u2019s Billing By The Hour<\/a><\/p>\n

\n

\"Headshot\"Joe Patrice<\/a>\u00a0is a senior editor at Above the Law and co-host of Thinking Like A Lawyer<\/a>. Feel free to\u00a0email<\/a> any tips, questions, or comments. Follow him on\u00a0Twitter<\/a>\u00a0or Bluesky<\/a> if you\u2019re interested in law, politics, and a healthy dose of college sports news.<\/em><\/strong><\/p>\n

The post AI Not Only Failed To Kill The Billable Hour, It\u2019s Looking Like Its Bodyguard<\/a> appeared first on Above the Law<\/a>.<\/p>\n

It really seemed like we had the billable hour on the ropes. <\/p>\n

You didn\u2019t need to buy the most extreme threads of artificial intelligence hype to think the technology would at least take a modest bite out of hourly work and leave attorneys either agreeing to accept less money \u2014 ha \u2014 or shift to a value-based billing regime to keep the gravy train rolling. <\/p>\n

But the hours haven\u2019t really gone down. <\/p>\n

The latest SMB Law Billing and Payments Report<\/a>, drawn from more than 60,000 small and mid-size firms using 8am<\/a> products MyCase and LawPay, reveals that the flat-fee revolution has not only failed to materialize, but the industry actually went into reverse. Flat fees made up 15 percent of all bills sent, which is down from 16 percent a year ago. That\u2019s not a huge retreat, but with AI adoption numbers surging, the fact that flat fees aren\u2019t headed to the moon suggests that the technology isn\u2019t having the impact we expected. Nearly half of firms still bill entirely by the hour, while only one in ten billed purely on flat fees. Firms with 11 or more employees cut back on flat fees the most, sliding from about 16 percent to 14 percent.<\/p>\n

The report doesn\u2019t bury the lede:<\/p>\n

\n

For most of the past decade, the legal industry has been predicting a shift away from the billable hour, because clients want predictability. The data showed firms making a different choice.<\/p>\n<\/blockquote>\n

It wasn\u2019t just predictability. Lawyers can\u2019t bill for time that doesn\u2019t happen (well, they can, it\u2019s just an ethical violation\u2026), so we assumed the time had finally arrived for the billable hour to disappear. So what\u2019s going on?<\/p>\n

Back in March, the 8am 2026 Legal Industry Report<\/a> found individual generative AI use more than doubling to 69 percent, with a majority of users reporting that the tools saved them hours every week. At that point, 22 percent of respondents predicted a broader move to flat fees. Then in July, 8am\u2019s billing data showed hours per case climbing<\/em><\/a> in nearly every practice area.<\/p>\n

Those reports drew from different pools, but that\u2019s a genuine disconnect. Lawyers answering surveys believe they\u2019re saving time, and the software compiling billable hours is here to say, \u201cno, you aren\u2019t.\u201d While clients whine about wanting time savings passed on to them, it\u2019s time to confront the fact that AI \u2014 at least as it presently exists \u2014 does not save time across a matter.<\/p>\n

Sure, it can turn out a first draft in seconds, but then a human lawyer has to spend a good chunk of the afternoon making sure the cited cases actually exist<\/a>, say what the AI claims they say, and haven\u2019t been overruled. <\/p>\n

But the less cynical issue is that AI doesn\u2019t do the work faster so much as finds more of it. Ask an AI tools to pressure-test an argument, and it\u2019s handing back three angles the lawyer hadn\u2019t thought of, and two lines of cases that would never have been pulled because there wouldn\u2019t have ever been time. A Biglaw team has always had the resources to hurl bodies into a brainstorm like that, but for someone working alone or with a lean team, these tools are opening up work that couldn\u2019t be done before.<\/p>\n

Human<\/em> work that couldn\u2019t be done before.<\/p>\n

This is what Jevons paradox looks like for law. When steam engines got more efficient in the 19th century, William Stanley Jevons noticed Britain actually burned far more<\/em> coal than before. The availability of cheaper travel made finding new uses for the fuel worth pursuing. Make it cheaper to explore a research avenue and lawyers explore more research avenues.<\/p>\n

The report doesn\u2019t dive into the AI aspect of flat fees, opting for a more straightforward explanation:<\/p>\n

\n

Before choosing between flat fee and hourly, consider whether a given matter is predictable and bounded enough to price up front. If it is, a flat fee makes sense. If it isn\u2019t, hourly protects the firm.<\/p>\n<\/blockquote>\n

But that\u2019s still an AI issue. If AI does what its most enthusiastic supporters swear it does, it compresses time spent on the matter and allows firms to cut back on expenses \u2014 and if the firm is able to do both of those things, it provides reliable baseline pricing data. Practice areas are all not created equal, but the promise of AI included smoothing out costly unpredictabilities.<\/p>\n

Instead, AI is kicking up work lawyers didn\u2019t have the luxury of pursuing before. Having a tireless idea generator just makes the scope of every engagement bigger.<\/p>\n

Billing per month grew 5 to 8 percent across firm sizes, and three of the four sizes didn\u2019t raise their hourly rates at all. That means the growth came from lawyers billing more. That doesn\u2019t necessarily<\/em> mean the lawyers are working more. It could just be capturing more worked time that went unbilled in the past. Firms with 11-plus employees billed nearly 12 percent more hours while logging fewer, pushing the share of tracked time that made it onto a bill from 44 percent to 49 percent. But at least some of that reflects time lawyers used to leave off the bill because they felt it wasn\u2019t truly productive time, and they now seem to believe it\u2019s worth billing.<\/p>\n

Since this is a vendor\u2019s data about its own customers, it\u2019s \u201cnot representative of every law firm in the U.S. legal market.\u201d But that also means it\u2019s showing what\u2019s happening at a group of firms that have self-selected into technology. <\/p>\n

And the trend is showing up at the other end of the market too! Citi found demand for Biglaw lawyers\u2019 time grew 4.2 percent in the first half of the year, nearly triple the normal pace. As Bloomberg Law\u2019s<\/em> Roy Strom<\/a> put it, \u201cClients insist that AI is saving time on legal work. And yet, they are paying for more hours than ever.\u201d<\/p>\n

You\u2019ve got to hand it to the billable hour. We invented a technology that put an ethical barrier on the billing model and it managed to come out as powerful as ever.<\/p>\n

SMB Law Billing and Payments Report<\/a> [8am]<\/p>\n

Earlier<\/strong>: Small Law Firms Billing More Hours Per Case \u2014 The Opposite Of What AI Promised \u2014 But At Least They\u2019re Getting Paid!<\/a>
Law Firms Prepare To Automate Themselves Out Of Their Own Business Model<\/a>
Billable Hour Dying So Slowly, You\u2019d Think It\u2019s Billing By The Hour<\/a><\/p>\n

\n

\"Headshot\"Joe Patrice<\/a>\u00a0is a senior editor at Above the Law and co-host of Thinking Like A Lawyer<\/a>. Feel free to\u00a0email<\/a> any tips, questions, or comments. Follow him on\u00a0Twitter<\/a>\u00a0or Bluesky<\/a> if you\u2019re interested in law, politics, and a healthy dose of college sports news.<\/em><\/strong><\/p>\n

The post AI Not Only Failed To Kill The Billable Hour, It\u2019s Looking Like Its Bodyguard<\/a> appeared first on Above the Law<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

It really seemed like we had the billable hour on the ropes. You didn\u2019t need to buy the most extreme threads of artificial intelligence hype to think the technology would at least take a modest bite out of hourly work and leave attorneys either agreeing to accept less money \u2014 ha \u2014 or shift to […]<\/p>\n","protected":false},"author":3,"featured_media":165871,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[16],"tags":[],"class_list":["post-165870","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-above_the_law"],"_links":{"self":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/165870","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/comments?post=165870"}],"version-history":[{"count":0,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/165870\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media\/165871"}],"wp:attachment":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media?parent=165870"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/categories?post=165870"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/tags?post=165870"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}