The problem is not that AI is advancing. The problem is that our billing model has never distinguished between those three elements. We bill 15 hours as though they all carry the same value, when in reality the client is willing to pay a premium only for the one that genuinely protects them: the partner’s judgement. The other 14 hours can now be handled in-house, with AI providing the initial layer of analysis. That is why a question is increasingly arising in fee negotiations: “The invoice shows 15 hours. Where is the AI discount?”

This is not speculation. A General Counsel at a German industrial multinational put it to me very plainly: they will no longer pay for junior lawyers’ hours. The General Counsel of a global software company went even further: their business will soon have its own AI, specifically designed to compete with traditional law firms. And a third, from a multinational consumer goods company, has already made it a formal policy: every matter exceeding €10,000 must go through a competitive tender process, with significant partner involvement and a low fee contractually required.

The transformation we are witnessing is unprecedented.

A law firm that continues to monetise the 14 hours its clients no longer wish to pay for is accumulating a deferred revenue problem: first, margins erode; then the impact appears in the profit and loss account. And by the time it does, the decision on how to address it will no longer rest with the firm, but with the client’s legal panel.

The model will change, with or without the law firm. The only question still open is who will write the rules: the firm, while it still has time to do so, or the next tender process, without warning.

Marc Gericó
Global Managing Partner of Gericó Associates