Why Hourly Rates Break Down With AI Efficiency

On April 4, 2025, I presented live on the topic of the shifting paradigm of billable hour and serving new legal market opportunities. I presented alongside Clio’s Lawyer in Residence, Joshua Lenon. Here are the top 5 takeaways:

* AI Will Automate a Large Portion of Legal WorkUp to 75% of all hourly billable work in law firms is projected to be automatable by AI in the coming years. This shift is already underway, with rapid adoption of AI tools across firms of all sizes, especially in mid-sized and larger firms.

* The Billable Hour Model Is Becoming ObsoleteAs AI drastically reduces the time required for many legal tasks, the traditional billable hour model is increasingly unsustainable. Flat fees, subscriptions, and value-based billing are emerging as more client-friendly and profitable alternatives, especially as clients become more aware of AI’s capabilities.

* The Latent Legal Market Is a Massive OpportunityThere is a huge unmet demand for legal services—estimated at over $1.3 trillion in the US alone. By leveraging AI and moving away from billable hours, lawyers can serve more clients, offer greater pricing certainty, and tap into this latent market.

* Industry-Specific AI Tools and Data Security Are EssentialGeneric AI tools are not reliable sources of truth for legal work. Lawyers should prioritize industry-specific AI solutions that use retrieval augmented generation (RAG) and ensure privacy, security, and compliance (e.g., SOC 2, HIPAA). Using the right tools helps avoid ethical pitfalls and increases accuracy.

* Client Expectations and Legal Practice Are EvolvingMost clients either prefer or are indifferent to their lawyers using AI, and younger generations are especially open to it. Lawyers must focus on delivering value, efficiency, and transparency. Adopting AI and new billing models not only meets client expectations but also positions firms for future success.

__________________________

Here’s a link to the slide deck that goes with the presentation.

Want to maximize your law firm? Get your ticket to MaxLawCon!

Sign up for Paxton, my all-in-one AI legal assistant, helping me with legal research, analysis, drafting, and enhancing existing legal work product.

Here's a link to purchase lifetime access to the recordings of My Shingle's AI Teach-In if you couldn't make it live.

I’ve partnered with Pii to make it easy for you to purchase the hardware I use in my law firm: (1) Studio Setup; (2) Midrange Setup; (3) Highrange Setup.

Get Connected with SixFifty⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, a business and employment legal document automation tool.

Sign up for ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Gavel⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, an automation platform for law firms.

Check out my other show, the Law for Kids Podcast.

Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Law Subscribed⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to subscribe to the weekly newsletter to listen from your web browser.

Prefer monthly updates? Sign up for the Law Subscribed Monthly Digest on LinkedIn.

Want to use the subscription model for your law firm? Sign up for the Subscription Seminar waitlist at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠subscriptionseminar.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.

Check out ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Mathew Kerbis'⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ law firm ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Subscription Attorney LLC⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.