AI and legal costs: billing the work actually done.

Legal costs are the quietest section of the AI guidance and the one most likely to generate client complaints. Under ss 172 and 173 of the Legal Profession Uniform Law, costs must be fair, reasonable and proportionate to the work performed, and s 174 requires proper disclosure of how costs are calculated. The December 2024 joint statement applies this to AI with two expectations that pull in the same direction: bills must accurately represent the legal work actually done, and AI use should not increase costs to the client above traditional methods.

Billing time that AI saved

The tension is obvious. If a first draft that took three hours now takes twenty minutes plus review, a time-billed file should show the smaller number. The statement is direct: time and work items billed must accurately represent work done by practice staff. Billing the historical time for an AI-accelerated task misstates the work, which is a s 172 problem and, at scale, an honesty problem under rule 4. Firms on fixed fees face the mirror image, where AI improves margin rather than misstating time, and the fairness question becomes one of pricing over time.

The costs AI adds

The statement also covers the reverse case: AI should not unnecessarily increase costs, including through additional time spent verifying or correcting its output. A tool that produces drafts requiring heavy rework can cost a client more than the traditional method, and passing that inefficiency through a bill sits poorly with s 172. This is a procurement point as much as a billing one, and our procurement guide covers the testing the guide recommends before a tool reaches client work.

Disclosure and transparency

The statement expects solicitors to properly record their AI use in a matter and, on request, to disclose to the client when and how AI was used and how that use is reflected in costs. The practical reading: a firm should be able to answer the question at any time, which is a record-keeping habit rather than a billing system change, and it belongs in the firm AI policy.

Where deployment posture fits

Cost structure follows architecture. Per-seat and per-query tools create marginal costs that someone eventually wants to recover on files; a capability with a fixed internal cost creates none, so there is no per-matter AI charge to justify, disclose or apportion. The billing duties are unchanged either way: the bill reflects the work, whatever produced it.

Common questions