(147) AI and Alternative Fee Arrangements

On May 20, 2025, I presented live on the topic of AI and Alternative Fee Arrangements at the American Bar Association’s AI and Virtual Law Summit. Here are the top 5 takeaways:

* AI is Transforming Legal Practice EfficiencyThe adoption of AI, especially generative AI, is revolutionizing how legal work is done. Lawyers who move away from the billable hour and embrace efficiency—using AI to complete tasks faster—can actually increase profitability, as less time spent on tasks means more money under alternative fee arrangements.

* The Subscription Model is a Profitable Alternative to Billable HoursMoving to a subscription or flat-fee model provides predictable revenue for lawyers and cost transparency for clients. This model incentivizes efficiency, reduces burnout, and fosters better client relationships, as lawyers are no longer penalized for working quickly.

* The Latent Legal Market is a Huge OpportunityA significant portion of legal needs in the U.S. (up to 90%) go unmet by lawyers, representing a massive, underserved market. Alternative fee structures and AI-powered efficiency can help lawyers tap into this “blue ocean” of potential clients who need affordable, predictable legal services.

* Using AI Ethically and Effectively is CriticalLawyers must use AI tools correctly—choosing the right tool for the right task, understanding the importance of retrieval-augmented generation (RAG) for fact-based work, and being aware of data privacy and compliance issues. AI is a powerful assistant, but not a source of truth on its own.

* Legal Practice is Evolving—Adapt or Be Left BehindThe legal industry is shifting toward technology-driven, client-centered models. Lawyers who embrace AI, alternative fee arrangements, and productized services will be better positioned for the future. The billable hour may eventually be seen as outdated or even unethical, so now is the time to adapt.

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

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