Artificial Intelligence is accelerating a shift in legal services—from hourly rates to transparent, outcome-driven pricing models
The End of the Billable Hour?
The legal industry is undergoing a profound transformation, with artificial intelligence (AI) driving a move away from traditional billable hours toward fixed and outcome-based pricing. As AI automates time-consuming tasks like legal drafting, document review, and research, clients increasingly demand efficiency, predictability, and value.
- AI allows legal work to be completed faster, reducing the justification for time-based billing.
- Clients now expect clear deliverables and defined pricing, instead of open-ended legal fees.
Clients Demand Certainty and Value
Corporate legal teams are leading the charge. General counsels are pushing law firms to embrace models already popular in management consulting: fixed, hybrid, or project-based billing.
“We are willing to pay a premium for outcome-driven results with defined costs—not open-ended hours,” said Unnati Divecha Patel, GC at Parksons Packaging.
- Fixed pricing is becoming the norm for M&A, IP, real estate, and compliance work.
- Legal leaders want not just cost transparency, but evidence of efficiency gained through AI.
AI Levels the Playing Field
The move to AI-driven legal services is not only about cost—it’s also about access and competition.
“AI could democratise legal services,” said Sanjeev Gemawat of Essar Group. “It enables small and mid-sized firms to deliver quality outputs once exclusive to big firms.”
- AI flattens traditional hierarchies, giving individual practitioners access to tools that boost quality and speed.
- This shift may redefine competitive advantage in the legal sector.
India’s Legal AI Market Is Booming
India is emerging as a key growth market for legal AI.
- In FY25, Nifty 500 companies spent over ₹62,146 crore ($7.27 billion) on legal expenses.
- According to Grand View Research, India’s legal AI market was valued at $29.5 million in 2024 and is expected to reach $106.3 million by 2030.
- Demand for efficiency and predictability is pushing law firms to adopt AI solutions to stay relevant.
Law Firms Adapt to New Realities
Top Indian law firms are already adapting to the AI revolution. From automated workflows to custom AI platforms, firms are rethinking both internal processes and client-facing services.
“We are flexible with billing and pass on AI-driven efficiency benefits,” said Haigreve Khaitan of Khaitan & Co.
“We’re building a future-ready, multidimensional practice,” said Nishant Parikh of Trilegal, which is using tech to streamline routine work and invest in niche specializations like ESG and international trade.
- Firms are piloting proprietary AI tools to analyse workflows and improve performance.
- Collaborative conversations with clients are shaping the use of technology and its integration into service delivery.
In-House Teams Embrace AI Too
Legal AI isn’t limited to law firms. In-house legal departments are also leveraging AI to reduce dependence on external counsel.
“AI has made many in-house tasks easier,” said BDO India’s Saloni Kothari. “We still value external advisors, but the need for them is declining.”
- AI tools help in-house teams boost productivity, meet rising compliance demands, and control legal spending.
- This further pushes the legal industry to evolve away from hourly billing.
The New Legal Value Proposition
AI is reshaping the value equation in legal services. What once took hours can now take minutes. As a result, billing models are evolving to reflect efficiency, impact, and transparency.
- Hourly billing may survive for complex legal opinions or bespoke litigation.
- But for the vast majority of services, fixed-fee models appear to be the future.
AI is transforming legal services, making routine tasks faster and prompting a shift from hourly billing to fixed, outcome-based pricing. This change, driven by clients and enabled by technology, is making legal help more efficient, accessible, and affordable.
