Key insights:

• • • There鈥檚 an AI awareness gap 鈥� Most corporate legal professionals do not know whether their outside legal counsel are using AI in handling their client matters, leaving both law departments and their firms in a state of AI uncertainty.

    • A potential upcoming billing model shift 鈥� Efficiencies from AI usage could have a major impact on how many law firms bill matters; value-based billing may need to replace or supplement hourly billing for matters in which AI is used.

    • Transparency builds trust 鈥� Lack of visibility and ROI measurement could erode trust between law departments and their outside counsel. Dialogue and measurements can strengthen the firm/client relationship and create scenarios in which both sides can reap the benefits of AI usage.

While the use of AI is increasingly widespread for both corporate legal departments and their outside law firms, there is a considerable lack of dialogue and data-sharing between the two sides on usage, guidelines, and expectations regarding AI. This complicates efforts to maximize the benefits of using AI, and it also may be eroding trust between the two sides.

Significant gaps in visibility and measurement

The 成人VR视频 Institute鈥檚 (TRI鈥檚) 2026 AI in Professional Services Report found major gaps in visibility and measurement between law firms and legal departments. The survey found that more than half of law firm respondents said their organizations are currently using or considering using GenAI. And more than half of corporate legal professionals surveyed said they feel that their outside legal firms should use AI on their matters.

However, more than two-thirds (68%) of corporate legal professionals admitted that they currently have no idea if their outside law firms are using AI or not.

In addition, neither side is effectively measuring whether or to what degree their use of AI is improving the delivery of legal services. Indeed, 85% of law firm respondents and 75% of corporate legal department respondents said their organizations are either not collecting ROI data on AI usage or are unsure if they are doing so.

Is your organization measuring the ROI of AI tools?

These visibility and measurement gaps make it difficult for both sides to plan how AI can and should be used in handling client matters. It also raises questions about how potential efficiencies from AI use will affect related factors such as how much firms charge for their services and how much clients are willing to pay. Half of legal professionals surveyed said they feel that AI is either a major threat or somewhat of a threat to billings and law firm revenues. Not surprisingly, the industry continues to wrestle with how to balance efficiency gains from AI against the limitations of the hourly billing model.

Concerns of corporate law departments

For corporate law departments, the lack of AI usage visibility and ROI measurement is producing a wide variety of responses, ranging from mild but growing concern all the way to outright suspicion about how law firms are using AI on their clients鈥� behalf. Law department respondents said that while they generally trust their outside counsel to make the right decisions regarding AI use and maintaining quality, most departments have not yet had conversations on those issues with their law firms, including how AI use will affect billing.

鈥淏illing has remained the same as it did before,鈥� noted one corporate legal department attorney. 鈥淪o, either they are not using AI tools efficiently, or they are just doing double work.鈥�

One corporate CLO was far more blunt in their assessment, especially given the lack of detailed discussions or data from firms: 鈥淚 fear that firms will use AI to cut time, but continue to bill for the hypothetical amount of time a task would have taken without it. It’s dishonest, but so are many firms.鈥�

One encouraging note is that, according to TRI鈥檚 2025 Future of Professionals Report, 56% of law firm respondents said they are highly or moderately confident in their ability to articulate the value of AI to their clients. Despite law firms鈥� confidence in explaining the value of AI, however, the visibility gap illustrated in the 2026 AI in Professional Services Report indicates that law firms are not actually having those conversations with clients. Indeed, some corporate law department respondents suggested their outside counsel may be reluctant to discuss AI with them because of concerns about quality and accuracy. One even suggested that firms may feel threatened by AI.

More & better communication is needed

As difficult and complicated as discussions involving AI usage may be, they are also essential. Absent those discussions, trust between firms and clients may be eroding, potentially jeopardizing long-standing relationships.

Here are a few steps that both sides can take to build confidence around the use of AI:

For law firms 鈥�

• • Communicate with clients 鈥� Hold discussions with clients that allow firms to detail how AI is being or will be used in client matters. Solicit feedback from clients about in which instances they would accept (or even demand) AI usage on different parts of a matter.
  • Develop an AI billing strategy 鈥� Determine not only how AI usage is impacting billable hours, but also how that will interact with the firm鈥檚 billing and pricing strategy.
  • Demonstrate and articulate value 鈥� Be prepared to explain billings in detail and answer client questions in terms of not only time and rates, but of value to the client. This includes both the value that AI brings to client engagement, but also the value that the firm brings above and beyond what technology provides, such as more freed-up time for lawyers to pursue value-added work.

For corporate law departments 鈥�

• • Lead the conversation, if need be 鈥� About three-quarters of both law firm and legal department respondents said it is the firm鈥檚 responsibility to initiate discussions around AI usage. However, corporate law departments should not wait for their outside firms to start the conversation. Take the initiative and make sure firms鈥� delivery models and fee structures are clear regarding AI usage.
  • Set expectations 鈥� Provide guidelines, expectations, or mandates on how and when AI will be used in handling client matters. This includes outlining specific use cases, data security protocols, and the human-in-the-loop oversight mechanisms that are used to ensure accuracy.
  • Build an external-facing metrics program 鈥� Law departments need to accurately measure the efficiency gains their outside firms are achieving to ensure that they, as the client, are receiving a fair price for value received. Baselines can be established for how long various legal matters took historically and how much they cost. The baselines then can be compared against AI-enabled engagements to evaluate ROI and business impact. This also allows legal departments to more thoroughly explain those gains to their own stakeholders.

For both corporate law departments and their outside counsel, it is imperative to engage in thorough discussions and develop data that can inform better decision-making. Such dialogue and measurements can strengthen the firm/client relationship and create scenarios in which both sides can reap the benefits of AI use.

You can download a full copy of the 成人VR视频 Institute鈥檚听2026 AI in Professional Services Report听here

To start, let鈥檚 address the initial problem. The term productivity as used by law firms is really a bit of an economic misnomer. For most industries, productivity deals with a measurement of outputs, or the things produced. For lawyers in law firms, productivity is actually a measure of inputs. And measuring the number of hours worked 鈥� the traditional way that law firms measure productivity 鈥� focuses on the amount of effort that goes into completing a task rather than the actual completion of the task or the amount of money it ultimately generates.

That syntactic quibble aside, there is clear and growing evidence that the way law firms measure productivity needs to change.

The problem with historical measures of productivity

Historically, lawyer productivity has been measured as a function of hours worked per lawyer per defined unit of time. Within the 成人VR视频 Institute, we have most typically reported two key variations of this metric: i) hours worked per lawyer per month; and ii) average daily demand per lawyer full-time equivalent (ADD per FTE).

Hours worked is a fairly standard metric employed by most law firms but is vulnerable to year-over-year fluctuations in working days in a given month. The latter metric, ADD per FTE, accounts for working day variation by tracking average hours per day.

Whichever option one chooses, however, it鈥檚 clear that these traditional measures of productivity have been in decline for some time.

Measuring hours per lawyer per month, we see a clear pattern of decline starting all the way back in 2007, some 17 years ago. Despite a bump during the transactional demand spike in 2021, the trendline of hours worked per lawyer per month is clearly pointing downward, off some 23 hours per lawyer per month since 2007. Even looking at ADD per FTE, it is clear that law firms have not been able to attain average daily demand figures on pace with 2022.

The diverging trends of productivity and profit

If law firm profits are inextricably intertwined with billable hours, as many law firm managers and partners would contend, then it would follow that we must be in the midst of a long-term decline in law firm profitability as well, right? Not exactly.

With the exception of 2022 when law firms experienced the double impact of declining demand and inflation rising faster rate growth, law firm profits have grown every year since 2010 with annual profits per equity partner (PPEP) increasing anywhere from 0.7% per year (2013) to as much as 16.1% (2021). Even in 2023, as traditional measures of productivity continued to decline, average PPEP improved by 2.3%.

Clearly, there must be other levers driving firm profitability beyond just worked hours.

Chief among these drivers has been rate growth. We鈥檝e written volumes on law firm rates over the years, clearly marking them as a key component necessary to improved law firm profitability. As I once explained to a managing partner, it doesn鈥檛 take much effort to show that something matters more than rates.

There is clear and growing evidence that the way law firms measure productivity needs to change.

Assume a hypothetical law firm at which an associate bills 2,500 hours in a year. Did that associate have a good year? By many traditional measures, yes. But what if that associated only billed and collected $1 per hour. How does that change the assessment of that lawyer鈥檚 performance? Clearly, the ability to generate money outweighs the simpler measure of the number of hours worked.

And therein lies the basis for the declining case for old-school productivity metrics. We鈥檙e in a nearly two-decade-long pattern of declining performance on traditional metrics, yet lawyers keep finding ways to improve profits. Rate growth continues at a historic pace, and there is increasing discussion in the market of wider use of alternative fee arrangements such as fixed or flat fees that would seek to focus more on the value of the outcome of the task or matter for the client rather than the amount of work input into the matter.

In this environment, relying simply on the number of hours worked as a measure of lawyer performance could well be an inadequate measurement of a lawyer鈥檚 contribution to the law firm鈥檚 financial performance.

It is quite possible that the transactional boom of 2021 may have been the last spike in historic measures of lawyer productivity. However, that does not mean that each lawyer will be contributing a declining share to the firm鈥檚 revenue and profits. Law firms need to face the challenge of looking at lawyer performance through new lenses that better reflect the changing realities of today鈥檚 legal services market.

You can download the full Relative Performance Measures听report, published by the 成人VR视频 Institute, here.

Recently, at the third annual Legal Value Network Conference Experience (LVNx), several industry experts discussed driving change in the legal industry and other pressing issues for law firms today and in the future. My team and I had the opportunity to present on a topic we consider extremely important and forward-looking: evaluating lawyer productivity.

A month ago, the 成人VR视频 Institute released the Relative Performance Measure (RPM) report, describing on a new metric for measuring lawyer productivity. The RPM report detailed the theory, motivation, and potential application of the RPM metric, which finds a timekeeper鈥檚 relative performance in fees worked and adjusts it for their relative performance in collection realization.

To offer an example, RPM evaluates an associate in an Am Law 100 firm, working in M&A in Boston, by comparing that associate to similar associates in the same law firm segment, location, and practice area. In the graphic below, we can see that this associate’s performance in generating fees is 3% below replacement level, while their collection realization is 6% above. After adjusting for these factors, their final RPM score is 2.1% above replacement level. Essentially, RPM is a profit-focused metric that measures an attorney’s relative output, rather than their total hours worked, providing a more comprehensive assessment of their economic impact.

To further the discussion, we created a workshop under the framework of a fantasy football-style draft, in which the audience and general managers (GMs) selected between two lawyers instead of professional football players. We enlisted four GMs and split them into two teams. Each round, we presented two anonymized lawyers from the dataset, provided productivity and demographic-related statistics, and asked the audience to debate and then choose their pick.

Round 1: Is productivity the same as hours worked?

First, we kicked off the first round by presenting two associates from the same class. Lawyer A had worked significantly more hours than Lawyer B, but Lawyer B had a higher collection realization rate. Following the initial presentation of the draft options, the audience was divided on their potential draft selection: supporters of Lawyer A argued that higher hours indicated greater dedication and potential for improvement in realization rates, while proponents of Lawyer B emphasized the immediate financial impact due to better collection realization.

After a spirited debate, one GM group selected Lawyer A, valuing the potential to improve realization rates, while the other group selected Lawyer B for the direct financial benefit. We then revealed the RPM scores: Lawyer B had a score 9% above replacement level, while Lawyer A had a score 2% below. The key takeaway was clear 鈥� hours worked are not the sole measure of productivity, and collections can significantly impact a lawyer鈥檚 economic contribution to the firm.

The GMs that drafted Lawyer A did so because they considered hours to be the primary area on which to focus with regards to productivity, however as I mentioned earlier, RPM is a profit-focused productivity measure; and under this lens, hours only matter if those hours lead to revenue generation.

While the argument that realization is out of an associate鈥檚 control is a fair one, we don鈥檛 see it like that exactly. Rather, we believe that realization is also a reflection of the quality of work that the associate provided which sometimes can lead to their partner discounting a certain amount during billing. Additionally, realization essentially captures the actual economic impact on the firm that the lawyer鈥檚 efforts have brought 鈥� bringing us, in turn, much closer to measuring what we consider productivity.

Round 2: Should productivity be absolute?

The draft continued as I presented another set of lawyers, both hailing from similar demographics, except for their office locations. (In this draft, Lawyer A came from New York City, while Lawyer B worked in Chicago.) Unlike the first round, however, their absolute productivity stats were nearly identical. They both commanded the same rate, while Lawyer A worked slightly more hours and collected a slightly higher percentage of their fees compared to Lawyer B.

With these much closer outputs, the audience and GMs leaned towards selecting Lawyer A, impressed by that pick鈥檚 marginally superior hours and realization rates. Then, however, one astute audience member pointed out a crucial detail: Lawyer A and Lawyer B were from different cities 鈥� one from NYC, the other from Chicago. This revelation prompted a quick re-evaluation of their choices. I could see the wheels begin to turn in the four GMs鈥� heads as they quickly re-evaluated what they had previously considered to be nearly identical stats. After a minute, both groups entered their pick: Lawyer B.

But why? Because despite similar rates, their performances were not identical when considering their respective markets. Lawyer A鈥檚 rate was nearly $100 less than the average for their peers in NYC, while Lawyer B鈥檚 rate was $40 higher than the average for their peers in Chicago. This meant Lawyer B had a greater financial impact on their firm relative to their market, despite a lower realization rate.

The key takeaway from this round, was that relative performance matters. We weren鈥檛 comparing Lawyer A to Lawyer B, we were comparing Lawyer A to Lawyer A鈥檚 peers and comparing Lawyer B to Lawyer B鈥檚 peers. Lawyer B鈥檚 financial impact in Chicago outweighed Lawyer A鈥檚 impact in NYC, showcasing that productivity should be measured in context, not in isolation.

Final rounds

Our session at LVNx concluded with additional draft rounds, further emphasizing RPM’s significance in evaluating productivity beyond mere hours worked and absolute measures. Each round highlighted how RPM could simplify the quantitative portion of talent evaluation, allowing law firms to focus more on qualitative attributes similar to the way that NFL GMs focus on non-measurable factors like attitude, coachability, and leadership. This balanced method ensures a comprehensive performance evaluation, aiding in better decision-making and talent management.

Overall, our workshop demonstrated that RPM is a profit-focused metric that measures an attorney鈥檚 relative output rather than their absolute output. By incorporating RPM into their evaluation processes, law firms can make more informed decisions, ultimately leading to better talent management and improved overall financial performance.

You can download a full copy of the 成人VR视频 Institute鈥檚 Relative Performance Measure (RPM) report here.

The Relative Performance Measures report, published by the 成人VR视频 Institute, introduces a new metric, the relative performance measure (RPM), that aims to capture the true value of lawyers’ work 鈥� not just the time they spend on it. RPM is a score that measures a lawyer’s relative performance in generating fees and collecting them, compared to their peers in the same segment, practice group, office location, or lawyer-title class.

Key takeaways

• • • The RPM metric has several advantages over traditional productivity metrics.
    • The new metric is more aligned with the outcomes and profitability of legal work, rather than the inputs and hours.
    • The metric is future proof. It can account for different pricing arrangements, is more resilient to macro-economic factors, and will adapt to the impact of AI and GenAI on how legal work is performed and billed.

The report also demonstrates how RPM can be used to analyze and improve the performance of lawyers, practice groups, office locations, and entire law firms. By utilizing RPM, law firms can identify their relative strengths and weaknesses, helping them identify and take actions to enhance their profitability and competitiveness among their peer firms.

For example, by understanding RPM in their firm, leaders can recognize and reward high-performing lawyers who may otherwise be overlooked by traditional performance metrics. Firm leaders also can diagnose and address the root causes of low-performing lawyers, such as poor collections, low billing rates, or inefficient work processes.

By utilizing RPM, law firms can identify their relative strengths and weaknesses, helping them identify and take actions to enhance their profitability and competitiveness among their peer firms.

Further, by looking at RPM scores of individual timekeepers and their ability to contribute to the firm’s financial performance, firm leaders can better optimize the staffing and leverage of the legal matters on which they鈥檝e been hired. From there, they can also benchmark and compare their performance against peer firms and identify best practices and areas for improvement or expansion.

Importantly, the report concludes that RPM is not a one-size-fits-all metric, but rather a valuable tool that complements other qualitative and quantitative measurements of lawyer performance. RPM is not intended to replace tracking of the billable hour, but rather to offer a better way for firms to measure lawyer performance in the age of AI.

By adopting RPM, law firms can prepare for an AI-driven future in which they can deliver more value to their clients and more profitability to their partners, even if they鈥檙e spending less time doing so.

You can download a copy of the 成人VR视频 Institute鈥檚 鈥淩elative Performance Measures鈥� report by filling out the form below: