Key takeaways:

• • • Subscriptions are a high-value option 鈥� Subscription-led pricing correlates with the highest value confidence and steadier revenue compared to hourly or fixed-fee models.

    • Three pricing packages evolve 鈥� Three tier packages (basic, standard & premium) create a clear value ladder and enable increased customization through modular add-ons.

    • Regular billing cycles help 鈥� Monthly or quarterly billing cadences improve transparency, client trust, and firm cash flow.

Tax, audit & accounting firms are in the middle of a pricing reckoning. Clients want clarity, firm leaders want confidence, and teams want to escape the treadmill of selling hours. The firms pulling ahead aren鈥檛 just raising rates, they鈥檙e re-engineering how they define and deliver value. Packaging, bundling, and especially subscription-based pricing are allowing firms to price with conviction, increase margins, and deepen client loyalty. The shift is not cosmetic, rather it鈥檚 a strategic reset from billing for hours to being paid for outcomes instead.

The confidence advantage of subscriptions

According to the recent 成人VR视频 Instiitute鈥檚 2025 Tax Firm Pricing Report, firms that have adopted subscription billing for most clients, tax professionals鈥� confidence in the value they鈥檙e providing is materially higher than when hourly or fixed-fee pricing models are used. Indeed, nearly one-third of tax professionals in subscription-first firms say they are highly confident that their pricing aligns with the value delivered, compared to less than 20% of those professionals in firms that use in hourly pricing.

Why the gap? Subscription pricing models reframe the client relationship around results, not individual tasks. These models anchor expectations, create continuity, and prompt ongoing conversations about progress and outcomes. They also bring predictability 鈥� steady revenue for the firm and transparent costs for the client.

Conversely, hourly and even traditional fixed-fee pricing models struggle to tell that story. They describe inputs and deliverables, while subscriptions describe impact.

Despite the benefits, firm adoption of subscription pricing is still in its early stages. Only a small portion of client engagements are currently based on subscriptions, although that share is growing rapidly. This gap is an opportunity for many tax, audit & accounting firms and their leaders. Indeed, the invitation is clear: Firm leaderss should identify those offered services in which outcomes compound over time 鈥� such as tax planning, strategy, compliance along with advisory 鈥� and transition those into ongoing, subscription-based relationships with clients.

Design services like products: The 3-tiered architecture

Modern pricing gains power from clarity. That鈥檚 why the most effective firms are organizing their services offering catalog into three simple tiers 鈥� basic, standard, and premium 鈥� which then allows for additional customization through modular add-ons.

This architecture does three things well: First, it creates a value ladder that allows firms to guide their clients to the right entry point while giving them a clear path to upgrade; second, it standardizes delivery, improving margins and team efficiency; and third, it enables customization without chaos.

Rather than reinventing a customized scope for each client, firms use defined add-ons 鈥� education planning, entity structuring, succession planning, and more 鈥� to tailor engagements to the client while maintaining operational consistency across all services.

Earning (and keeping) your fee increases

The best-performing firms aren鈥檛 timid about fees. They鈥檙e raising prices 鈥� and keeping clients 鈥� because they鈥檝e reframed the value conversation. Instead of talking about more hours or complexity, they instead talk about the kind of outcomes that clients actually care about: peace of mind, risk reduction, strategic clarity, and measurable savings. The tax professionals bring real examples, case studies, and ROI to the table, and they benchmark. They review pricing annually or even quarterly, and they communicate changes to their clients in a way that feels transparent, justified, and aligned with client goals.

This is a pivotal shift for many tax, audit & accounting firms. The professionals at these firms have learned that when clients understand the outcome, the price makes sense; and when they don鈥檛, the conversation reverts to cost. Packaging and subscriptions make this communication repeatable. In this environment, tiers create contrast, add-ons create choice, and benchmarks create external validation. Together, these factors shift the dialogue with clients from How much? to What鈥檚 the impact? 鈥� and that鈥檚 a win for firms.

Predictability is a service

If trust is the currency of advisory work, predictability is the interest it earns. Monthly or quarterly billing rhythms can reduce friction, improve cash flow on both sides, and transform tax from a once-a-year scramble into an ongoing partnership. Sending out clear, consistent invoices mapped to packages and add-ons can reinforce the story of value delivery. Internally, predictable revenue can smooth seasonality within a firm, supporting hiring and capacity planning, and reducing the temptation to discount prices under pressure.

Customization at scale

Clients want to feel known, and your tax team needs to stay sane. The answer isn鈥檛 to create bespoke products for everything, rather it鈥檚 to encourage segment-smart design. Build packages for common client profiles by industry, entity type, size, or lifecycle stage, then equip your team with modular upgrades that align to clear outcomes. This allows tax advisors to make confident recommendations, identify retention risks early, and adjust scope based on profitability and feedback 鈥� all without blowing up workflows.

Think like a product organization: Define standard features, articulate premium benefits, and maintain a disciplined roadmap of add-ons. Then enable your tax advisors with a playbook 鈥� which clients get what, when, and why 鈥� so the client experience feels personal while the back office remains efficient.

A practical path to transition

If you鈥檙e ready to move from hours to outcomes, you should start with focus and speed. Here are several steps that can help:

• • • Choose the right beachhead 鈥� Identify one or two services that are ideally suited for ongoing value, such as monthly accounting plus tax, annual planning with quarterly check-ins, or entity support and then package those services into clear tiers.
    • Build the narrative 鈥� For each tier, translate features into outcomes. Replace X reconciliations and Y reports with real-time visibility, faster decisions, and fewer surprises. Back this effort with case studies and quantified savings wherever possible.
    • Set billing cadence and service-level agreements 鈥� Decide what services can be billed monthly compared to quarterly, define response times and access levels per tier, and codify communication rhythms. Make service levels visible, because again, clients value clarity.
    • Pilot, then expand 鈥� Roll out your initial offerings to a defined client segment or cohort. Collect feedback, refine scope, and test pricing elasticity. Use early wins to train your team and inform a broader rollout.
    • Institutionalize benchmarking and reviews 鈥� Compare your pricing against peers and alternative service providers at least annually. Review client outcomes quarterly and then adjust tiers, add-ons, and messaging based on what you learn.
    • Equip your team 鈥� Give your tax advisors scripts, ROI calculators, and objection-handling guidelines. Realize that confidence is contagious, both internally and externally.

Shifting from selling time to selling outcomes requires more than a new price list. It asks firm leaders to design services intentionally, measure impact consistently, and coach their teams to speak the language of results. It also asks firms to treat pricing as strategy, not administration. Firms should be explicit about what clients they serve, what they promise, and what it鈥檚 worth.

The firms that make this shift will do more than improve margins. They鈥檒l build sturdier client relationships, reduce scope creep, and cultivate a culture in which the team understands 鈥� and can articulate 鈥� the value they create. In a world in which talent is tight and client expectations are rising, that kind of intentional clarity can be a strong competitive advantage.

You can download a full copy of the 成人VR视频 Institute鈥檚 recent report on tax firm pricing,听Steps for increased confidence in pricing, here

Key takeaways:

• • • AI allows lawyers to work on more complex matters 鈥� By streamlining routine legal tasks, AI enables lawyers to focus on higher-value work, which then revives market interest in outcome-based pricing models.

    • Establishing trust with AI is critical 鈥� Building client trust with AI means providing clear explanations, maintaining open communication, and ensuring that human judgment remains central to the legal process.

    • Keeping an eye on AI鈥檚 work quality 鈥� Declines in quality from AI-assisted work can make clients question the value of legal services.

As AI becomes part of everyday legal work, the traditional way of charging clients by the hour may be long past its expiration date. And as the 成人VR视频 Institute鈥檚 2025 State of the US Legal Market Report argues, this change isn鈥檛 just about using new tools 鈥� it鈥檚 about redefining how legal value is delivered.

A new opportunity to bill based on value

For many years, the billable hour has held sway in the legal industry; and while this method is familiar, it is falling behind how legal work is increasingly being performed today. AI now supports tasks like document review, legal research, and drafting, reducing the time lawyers spend on routine work and creating more opportunities for higher-value work.

As a result, a seemingly stagnated theory of pricing is once again gaining ground 鈥� one that focuses on outcomes instead of hours. In this model, clients pay for what gets accomplished: resolving a dispute, drafting a contract, or ensuring compliance with regulations.

This approach ultimately strengthens the relationship between firms and clients. It rewards results, encourages clear communication, and makes pricing more predictable and fair. However, this shift also brings new challenges for law firms and their clients, especially around trust and quality.

Building client trust using AI tools

Clearly, clients benefit from faster and more cost-effective legal services; however, they also need to trust that the work they receive from outside counsel is accurate and meets professional standards, even 鈥� or perhaps especially 鈥� when AI is involved.

To build that trust, AI systems must be used responsibly. Lawyers using AI should be able to provide clear explanations of how they reached conclusions, keep records of their steps, and always involve a human review and approval of the final work. Clients don鈥檛 need to understand every intricacy of the technology of course, but they do need to know that the process is safe, ethical, and well-managed.

Many law firms are already using AI tools in their daily work. While these tools can improve efficiency, it鈥檚 important to not assume that clients will always be comfortable with them. One way to monitor this is by looking at the realization rate in fees, especially the difference between what the client actually agreed to and what was actually collected. This metric can show to what degree clients may be pushing back on service they feel didn鈥檛 meet expectations.

Over the past three years, realization rates have remained steady, just above 90% 鈥� however, that doesn鈥檛 mean there鈥檚 no risk. If AI is used carelessly, the quality of work could suffer, and clients may start to question their bill. That鈥檚 why it鈥檚 essential to use AI with clear processes and human oversight, so it supports the value that clients expect rather than creating problems for the firm and the client.

Declines in quality can lead to doubts about value

As AI becomes more commonplace in legal processes, the quality and reliability of submissions must remain high. This matters not only for the fairness of proceedings, but also for how legal services are valued.

If AI-generated documents are submitted without proper review or contain errors, it can lead to delays, rejections, or even sanctions. These outcomes affect the perceived value of legal services and can undermine client trust, especially in an outcome-based pricing model, where results matter more than effort.

To support this shift in pricing, legal professionals must ensure that AI-assisted work meets the same standards as their traditional submissions. This includes verifying sources, disclosing AI use when appropriate, and maintaining human oversight. By doing so, law firms protect the quality of their work and reinforce the value they had promised to deliver.

According to the 成人VR视频 Institute鈥檚 2025 survey of state courts, many in the legal profession already are thinking about these issues. The top concern 鈥� shared by 35% of judges and court staff professionals who were surveyed 鈥� is that people may rely too much on technology and lose essential skills. Another 25% said they worry about AI being misused, such as by generating fake legal documents or false evidence.

These concerns highlight the need for clear standards and responsible AI use 鈥� not just to protect the legal process, but to support the shift toward pricing models that are based on trust and outcomes.

What the legal industry needs from AI

To enable the transition to outcome-based pricing, the legal industry needs AI systems that do more than just answer questions. These tools should be able to plan, reason, and complete complex legal tasks. They must be easy to understand, explain their results, and fit naturally into legal workflows. Most importantly, they should always allow for human judgment.

These systems should be built with expert knowledge, trusted legal content, and strong ethical standards. Indeed, these AI-driven technologies aren鈥檛 just tools, rather they鈥檙e partners that help legal professionals do their work better.听In fact, moving from billable hours to outcome-based pricing is more than a change in billing 鈥� it鈥檚 a new way of thinking about legal work.

As AI continues to evolve, lawyers will spend more time on strategy and client relationships. And that鈥檚 good, because the future of legal work isn鈥檛 about doing more, it鈥檚 about doing better 鈥� and that future is already taking shape.

You can download a full copy of the 成人VR视频 Institute鈥檚 2025 State of the US Legal Market Report here

The advent of generative AI (GenAI) with its promises of increased productivity and efficiency are a welcome assist with this do more with less pressure that GCs have felt for years. However, they do not necessarily expect that GenAI will be an all-purpose solution.

GenAI tools can only do so much in terms of legal work. Many legal tech pundits have observed that GenAI does not replace roles, rather it completes certain legal tasks. Applied to the workload conundrum that GCs have to address, GenAI can be used to take over certain tasks that are consuming hours of legal department staff time, particularly those tasks that are most repeatable. A key question remains, however: Will the increases in efficiency in automating these repeatable tasks free up enough capacity among law department staff to allow them to pull a greater volume of legal work in-house.

In classic lawyer fashion, it depends.

Anecdotally, many GCs worry that GenAI will bring with it not only greater efficiency but also even greater demands for the legal department鈥檚 services. Applied broadly, GenAI is predicted to catalyze the already accelerating pace of the business cycle while at the same time creating a host of potential legal issues, ranging from intellectual property and privacy concerns to enterprise-wide data compliance challenges. Indeed, one legal department operations executive with whom I recently spoke with said that his team anticipates certain types of matters and tasks will increase not by 50% to 60% but by 500% to 600% of the current volume.

The impact of larger volumes on matter pricing

Watching from the outside, law firms are understandably concerned that the efficiencies GCs are counting on to help in-house legal teams could potentially devastate law firm revenue streams. On a micro level, individual tasks and even whole matters may experience pricing decline as work can be completed dramatically faster. However, this fear may not come to fruition after all.

First, revenue for certain types of legal work might decline, but the profit margin of that work might expand greatly due to the increased efficiency with which it can be completed.

And second, the volume of work available could potentially grow exponentially. The same legal ops professional I spoke with also said that if the costs of some types of legal work doesn鈥檛 decrease, and decrease dramatically, their current projections have them legitimately worried about how they will complete the work using only their in-house team and whether they would be able to afford to use outside counsel. It may simply incur too great a cost at too large a volume to be sustainable.

A few potential lessons

For GCs, it is critical to begin to get an understanding of what matter volume projections might look like as AI becomes more fully integrated into their organizations. However, it鈥檚 important to note that this does not mean as AI becomes integrated into the law department 颅鈥� rather, it means measuring AI鈥檚 integration into the business as a whole, as these two events may happen at very different times.

Thus, GCs should start to map out what these volume projections might look like now. And these projections do not have to be completely accurate, but they should be directional indicators of potential areas of concern. Such an exercise is necessary for long-term resource and budget planning. It is wise to assume that whatever matter- and task-volume growth is projected will be an underestimation, but going through the exercise will allow the in-house legal team to more effectively plan for what the future may hold.

For law firms, now is an excellent time to start having conversations with clients鈥� in-house legal teams to get a better understanding of what anticipated needs they are seeing for the coming years. These needs will vary from client to client, of course, but identifying them now will help give law firms some ideas of where additional staff might be required.

The insights gained from these conversations can also help steer future pricing decisions. For example, if the client anticipates a large increase in they type of work their outside firm already performs, that may be an indication to the law firm that even if the per unit price for that type of work goes down, there may be a lot of money to be made out of increasing volume, provided that the work does not dip into the realm of negative profitability.

This, in turn, can help bolster an argument to create more robust alternative or fixed pricing options for the types of repeatable work that clients anticipate will increase in the coming years. This is because the repeatability of much of this work could make it susceptible to decreases in billable hours worked, if that is the measure. This, in turn, could drive total prices for the tasks into unsustainable territory that both hurts law firms鈥� overall revenue and while not adequately reflecting the value of the service delivered.

To be sure, a task that used to take 10 hours to complete at a cost of $5,000 (at an assumed rate of $500 per hour) does not suddenly become worth $250 because it can now be completed in 30 minutes. However, unless the firm and the client reach an agreement on the actual value of the service delivered, that could be the undesirable outcome.

Both parties need to begin this conversation around actual value 颅鈥� what is the outcome of the legal work worth to the client beyond simply the time it took to produce? 鈥� which then lays the groundwork for the evolution of matter pricing.

In this way, law firms can protect their revenue streams while taking advantage of efficiencies for greater margin and seeking more client matter volumes to fill available working hours. GCs can address their increasing matter volumes through negotiations that give them more favorable pricing terms from their outside firms to better safeguard their budgets without expecting their in-house staff to absorb all of the new work.

It’s critical to understand that the first efforts at identifying this AI-optimized practices areas and establishing new prices for them will not be the end point 鈥� they will, however, serve as a good start. Some early efforts will be more successful than others, which is why honest and open communication between law firms and their clients will be vital.

However, the worst option for all would be to wait too long to see what happens. The end result of that approach could have incredibly negative consequences for GCs and law firms alike.

You can find out more about the challenges of pricing AI-driven legal services in today鈥檚 legal market here

From the editors: This piece was originally submitted by our friend and colleague, the late James (Jim) Jones IV, as part of the proposed content for the 2025 Report on the State of the US Legal Market. Although it was not included in that publication, we have published it here in honor of Jim鈥檚 memory and legacy as a gifted educator who never failed to provide wise insight with interesting context.

Billing for legal work based on the amount of time it took to produce that work is not necessarily the proverbial 鈥渨ay we鈥檝e always done it.鈥� Indeed, the invention of the billable hour is widely attributed to Reginald Heber Smith, who was managing director of the Boston law firm Hale and Dorr (now Wilmer Cutler Pickering Hale and Dorr) from 1919 to 1956.

Ironically, rather than coming from how legal work was done in a big law firm, the concept grew out of Smith鈥檚 work in legal aid. In 1913, Smith 鈥� recently graduated from Harvard Law School 鈥� was invited to become counsel at the Boston Legal Aid Society. What he confronted in that job, according to , was 鈥渢he challenge of funding and staffing approximately 2,000 legal aid cases per year on a shoestring budget, with the help of only a few assistant counsel, a social service secretary and some clerical assistants.鈥�

Tracking the hours

Realizing that he needed help, Smith sought assistance from Prof. William Morse Cole and his students at Harvard Business School. The result was the design of a new accounting and recordkeeping system for the Boston Legal Aid Society, a key part of which was a system for the accurate tracking of hours spent by each lawyer on each matter. Using the system, Smith was able to clear 65% more cases than in the prior year, and he significantly reduced the average cost of each case. Smith remained at the Society until 1919, when he joined the newly formed firm of Hale and Dorr.

Notwithstanding its development in 1913, the billable hour did not become the de facto standard for pricing legal services until the early 1970s. In the early days of the country鈥檚 history, attorneys provided legal services on a fixed-fee basis, normally using fee schedules set by state law. In 1908, the American Bar Association approved the use of contingency fees by lawyers. And this action was followed by the approval of other forms of payment, including bar-approved flat fee minimums.

As described by Jonathan H. Choi in his 2018 paper, , 鈥淸p]rior to the 1970s, lawyers billed their clients primarily through a combination of fixed fees, contingent fees, and an amorphous method known as 鈥榲alue billing,鈥� wherein they would simply hand the client a bill at the end of the matter for 鈥楶rofessional Services Rendered.鈥� Few lawyers itemized their services by the hour or established a written compensation agreement with the client in advance.鈥�

Explosive growth

All of this changed abruptly in the 1970s with the explosive growth of corporate in-house legal departments. Corporate general counsel embraced the billable hour because they believed it provided transparency into the relationship between the work done by outside counsel and the fees charged. Adoption of the new model was also fueled by the 1975 decision of the U.S. Supreme Court in , which invalidated bar fee schedules as violations of the Sherman Act.

While the billable hour, upon which law firms have become reliant, began simply as a way of valuing legal services, it quickly mutated into the dominant model for the evaluation of lawyer performance; for measuring the economic value of matters, clients, and practices; and for setting economic goals.

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As the billable hour model satisfied clients鈥� demands for more insight into the work of their outside lawyers, it was also used to enhance productivity as many law firms adopted policies requiring lawyers to bill a certain number of minimum hours each year. By the 1980s, the billable hour had become the linchpin of law firm management, surviving many predictions of its imminent death.

However, the model itself contains several inherent flaws that have become increasingly evident over time. And now, as we move into 2025 and engage a more AI-driven approach to legal work, many predict the billable hour 鈥� at least in the form the market has always recognized 鈥� may have to change too.

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Through our examination of these issues, one thing is becoming increasingly clear: 2025 is likely to be a year in which lawyers need to start making decisions around AI and define the changes they want to see 鈥� or those changes will be defined for them.

Moving from awareness to action

Through any process of change management, there is a necessary period of learning and discovery in which we build awareness. This awareness-building period cannot be of unlimited duration, however. If it was, we鈥檇 never get to the actual change. At some point, we must move from awareness to action. And while we are definitely not done learning about AI, the impetus to move toward action is growing.

Many law firms and corporate law departments are well down the road toward implementation of advanced AI technologies. According to 成人VR视频 2024 Future of Professionals report, 70% of corporate legal professionals have used AI as a starting point for their work; and there is growing evidence that in-house attorneys are recognizing AI鈥檚 potential to improve productivity, increase the amount of work that can be handled by the in-house team, and find new efficiencies. They are also looking for increased feedback from their outside counsel about how they are using AI to benefit the department.

Nearly half of law firm lawyers have said they are waiting before moving too far with AI until the tech becomes more mainstream.

On the other hand, this excited embrace of AI isn鈥檛 universal. The report also showed that nearly half of law firm lawyers are waiting before moving too far with AI until the tech becomes more mainstream. They are engaging in lawyers鈥� favorite sport 鈥� the race to be second.

That race isn鈥檛 operating by its normal rules when it comes to AI, however. A classic race to be second involves law firms actually watching each other to see what their peers are doing and then following the precedents. In this race, however, clients are playing a much more influential role, both as bystanders and as competitors. In fact, they are changing the rules mid-race by establishing new mandates and setting higher expectations.

In May 2024, I participated in a roundtable discussion with a group of about 40 managing partners from midsize law firms around the country. One shared a story of a client that had recently let it be known that it was aware of the capabilities of GenAI 鈥� or at least it thought it was 鈥� and wanted to implement new requirements that GenAI be used to replace all work currently being done by their outside firm鈥檚 paralegals. The client further stated that it would no longer be paying for paralegal time.

As the managing partner explored the practical impact of this change, a few things became apparent. First, the new policy of not paying for paralegal time would have a massive impact on the firm鈥檚 ability to generate revenue, which would far outweigh any potential saving realized by downsizing paralegal staff. Second, by not being willing to pay for paralegal time, the client had unwittingly forced work to be pushed up to more expensive timekeepers. Third, the client was wrong about the capabilities of the technology.

Today鈥檚 GenAI is not ready to completely displace paralegals, and it likely never will be. Effective AI technology lives at the intersection of tech, data, and expertise, with expertise being an indispensable factor in the equation.

Managing expectations

This managing partner was in a quandary. How does she respond to the client? My advice was to go back to the client with an honest, factual explanation of how they are mistaken, and then shifting the conversation in a proactive direction. She should say: 鈥淲e can鈥檛 do that, but we can do this instead.鈥�

Reliable and effective AI requires the touch of human expertise, and if a client鈥檚 expectations don鈥檛 reflect that reality, guide them.

Clearly, law firm leaders can鈥檛 simply refuse to go along with the client鈥檚 expectations. However, just because they are expectations doesn鈥檛 mean they are realistic. Rather than trying to make the impossible happen or jeopardizing the client relationship by refusing, a more pragmatic approach is to help the client see a different path. To accomplish this, do not lead with the financial concerns, even if they are prominent. Revenue generation problems for the law firm will not sway the client. What will potentially change their outlook, however, is a reframing of reality.

As mentioned, reliable and effective AI requires the touch of human expertise. If a client鈥檚 expectations don鈥檛 reflect that reality, guide them. And then remind them that such expertise doesn鈥檛 necessarily have to come from partners, and that it may be more cost effective coming from associates or paralegals. Indeed, this is why law firm exist in a pyramid already.

Firm leaders should also see this as an opportunity to expand the conversation with clients around how legal work could be delivered and priced in a way that meets goals for both sides.

The importance of setting whose terms will control

The situation described above is not uncommon and will likely become more commonplace as these new technologies become more widely adopted. However, that is not to say that such situations are inevitable. The guiding principle, instead, should be the old clich茅, the best defense is a good offense.

There is no reason law firms need to wait to see what mandates clients will try to push upon them. Clients are moving into an action phase themselves, but the actions they will decide to pursue are still very much open to influence.

Rather than racing to be second in AI adoption, law firms should be looking to take the first step. Here I draw another analogy, this time to a discipline familiar to nearly every lawyer 鈥� negotiations. Most lawyers would rather be negotiating off of their own common terms and conditions rather than the opposing parties鈥� set of terms. Better to be reviewing redlines than be in the position of constantly having to propose the redlines.

To put this into an AI context, smart law firms will take what they know about AI already, put together a few suggested use cases and starting points, then ask clients for their help and collaboration in building out those use cases. In that way, the changes the law firm experiences will be ones in which they鈥檝e played an active role, and they know the client is on board because the client has been involved.

That鈥檚 not to say that all AI-driven changes will require that process, but it鈥檚 a wise path to take as a starting point. Just as a process of discovery is needed to learn AI, such a process is also needed to learn how the client would like to see AI used. Once some of those guidelines are set, the firm will be in a much better position to drive new change initiatives on the client鈥檚 behalf going forward.

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Likewise, law firms won鈥檛 need to engage in this process with every client. Pick a few key clients and start with them. Perhaps those are participants in the firm鈥檚 key account program, or maybe certain clients have expressed a greater desire to begin using AI on their matters. Regardless of the selection criteria, the work done with these first few clients will help build a repository of use cases and best practices that the firm can then look to implement more broadly.

Waiting is not the best option

The idea of proactively approaching clients to ask them to participate in what is essentially a joint experiment may feel uncomfortable and a bit daunting. The key consideration, however, is not whether that exercise feels more uncomfortable than standing still. Law firm leaders have to consider whether they will feel more pain from asking the client to learn together, or from having to go back to clients to try to manage expectations, working off the back foot to push them to change decisions the client has already made 鈥� the position of the managing partner describe above.

The time for a wait-and-see approach to how AI will change the legal market is rapidly expiring. Law firms and their clients have an opportunity to work together to shape what the future will look like 鈥� and the burden to start that conversation most likely rests on law firms鈥� shoulders.

If law firms wait too long, favoring their chances in the race to be second, clients will justifiably move on without them. The result will not be a marketplace that goes largely uninfluenced by AI; instead, it will be one in which clients have decided what changes suit them best.

For both law firms and corporate legal departments, 2025 will most likely be a year to lead, follow, or move along together. Getting out of the way will not likely be a choice.

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Managing expectations

Those involved in pricing discussions within their firm know that a key component of their role is to help manage expectations of what is feasible and what represents fair value for both the law firm and the clients they serve.

They also know that the hardest conversations to be had can often come internally 鈥� nowhere more so than those around profitability. And it is here that the harder conversations are going to need to happen as AI-driven legal technology and its newer sibling, generative AI (GenAI) take hold. In the previous blog post, I alluded to the impact these types of tools can have, and most legal commentators acknowledge that time-based savings of 50% due to use of these technologies are not unrealistic and may even be a conservative estimate.

Law firms are going to need to increasingly adopt legal technology (and especially GenAI) into their processes and workflows, both to serve client demands and to eliminate more administrative and laborious activities. And this comes at a cost 鈥� the cost of these solutions (for example, license fees or internal development), the costs of set-up and ongoing maintenance, and critically the cost of lost billable time.

You can find more on pricing AI-driven legal services here.

Those more familiar with law firm profitability know that the engines of profitability within most firms are the associate and senior associate ranks, in which the hourly rate charged provides a healthy margin once respective costs are deducted. But what happens if these technology-based solutions remove or greatly diminish a firm鈥檚 ability to charge time, especially when considering that is where the majority of margin is generated for the firm? It is here that the pricing professional鈥檚 role in managing internal expectations around profitability will be essential.

The key questions that pricing professionals therefore need to be asking themselves and others within their firm now 鈥� before it is too late 鈥� include:

• • • What work will legal technology and AI best suit?
    • Who is typically doing the work?
    • What does this mean for underlying law firm profitability at a matter, client, and firm-wide level?

Although 鈥渂elieve that [GenAI] will have a positive impact on revenue and margins,鈥� those in pricing roles need to start doing profitability analysis now. 听This analysis will allow them to model the broader impact of legal technology in specific practice areas, across their firms鈥� client portfolio, and ultimately within their firms themselves, so that the right conversations can begin to happen. In this way, expectations be proactively managed, and appropriate pricing strategies can be developed and implemented.

Pressure on billable hours

As increasing pressure is put on billable hours through the adoption of these AI-driven tech solutions, many firms need to start (if they haven鈥檛 already) to move towards increased adoption of fixed fees. Not only does this mean that the inputs to a matter in terms of time are less relevant, it encourages greater rigor around where and how technology can support matter delivery. Very importantly, it also encourages a much more systematic review of what the matter is worth and allows for the collaborative value discovery with the firm鈥檚 clients. This process will ensure both the law firm and the client that prices are fair to both parties and is being driven by what it enables the client to achieve, such as helping a client increase revenues, improve cashflow, or manage and mitigate risk.

It is in these discussions that pricing professionals have a critical role to play.

Clearly, there are also many barriers which exist at the firm-wide level which can hinder the swift adoption of legal technology solutions and many of are these fundamental to the industry, including risks around compliance, the law firm partnership model, and continued use of billable hours as firms鈥� main revenue-generation tool.

However, there are other considerations that need to now be factored in by client teams and law firm management much earlier in the legal technology development process, especially as these relate to pricing. These considerations include:

• • • Who leads the client discussion and who is best placed to represent the firm? No longer may this be the sole role of the client relationship partner, but now could include those in pricing, legal project management and legal technology roles.
    • Who is best placed to help develop and define the value proposition? This may not now only reside with a practice group marketing team or proposals group, but again may need to be much wider in scope in order to capture different perspectives and insights from across the firm.
    • Does the law firm risk driving a commoditization of their services and what are their key points of differentiation that need to be defended and articulated? Closely aligned to this: Is the law firm in danger of cannibalizing its own revenues? (For example, document automation solutions can sometimes eliminate 60% to 80% of the billable hour costs and associated revenues.)
    • Who is responsible for the development and ongoing maintenance of these solutions once implemented with a client? Have these additional elements of cost been considered both at the initial product pricing stage and thereafter?

Technology and client value

The adoption of today鈥檚 AI-driven technology is clearly going to become one of the key ways that law firms can offer superior client value when delivering legal services in the years to come. As : 鈥淚t may even be considered legal malpractice听not听to use AI one day… It would be analogous to a lawyer in the late 20th century still doing everything by hand when this person could use a computer.鈥�

Those pricing professionals and others involved in helping client teams successfully deliver legal technology solutions to their clients and helping ensure appropriate firm-wide investments and profits need to be acutely aware of the pricing pitfalls that may occur at the early stages of this journey. For many, this may mean dusting off the pricing textbooks and remembering how other industries 鈥� such as consumer products and manufacturing companies 鈥� approach their own pricing challenges.

As to the impact of AI-driven technologies and GenAI on the legal delivery model and pricing, we still undoubtedly have much to learn, but it this instance, fortune really does favor the brave. For the pricing professional, their time 鈥� once again 鈥� is now.

(Portions of this blog series have appeared previously in the author鈥檚 book,听, and in previous articles.)