Survey Reveals AI's Limited Impact on Law Firm Billable Hours

What's Happening?

A recent survey conducted by the Association of Corporate Counsel indicates that the integration of generative AI in law firms has not significantly reduced billable hours for clients. Despite the promise of AI to streamline tasks such as document review, nearly 60% of in-house counsel reported no noticeable savings from their outside counsel's use of AI. Only 13% observed a reduction in billable hours, while 20% noted improved turnaround times. The survey highlights the challenges law firms face in pricing AI-driven services and the slow adoption of AI tools within corporate legal departments. The survey, conducted between June and July 2025, included responses from approximately 650 in-house counsel and legal operations professionals.

Why It's Important?

The findings underscore the slow pace at which AI is transforming the legal industry, particularly in terms of cost efficiency. As law firms struggle to integrate AI into their billing models, clients are increasingly seeking ways to leverage AI for cost savings. This shift could pressure law firms to rethink their pricing strategies and adapt to the growing demand for AI-driven legal services. The survey suggests that corporate legal departments may begin to adopt AI internally, potentially reducing their reliance on external counsel and driving further changes in the industry.

What's Next?

The legal industry may see a shift in how services are priced as clients push for AI-driven efficiencies. Law firms might need to develop new billing models that reflect the time savings offered by AI tools. Additionally, as more corporate legal departments adopt AI, law firms could face increased competition from in-house teams capable of handling labor-intensive tasks. This evolution could lead to a reevaluation of the role of external counsel and the services they provide.

Beyond the Headlines

The slow adoption of AI in the legal sector raises questions about the industry's readiness to embrace technological change. Ethical considerations regarding AI's role in legal decision-making and its impact on the quality of legal services may also emerge as AI becomes more prevalent. The industry's ability to balance innovation with traditional practices will be crucial in navigating these challenges.