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Billing and time

Clients now expect AI savings: how solo and small firms can price AI-assisted work

An October 20, 2026 survey found 60% of in-house lawyers expect lower fees or fewer billed hours from firms using AI, and 81% expect outcome-based pricing to overtake the billable hour within five years. What ABA Opinion 512 says and how to set flat fees that hold up.

Published 5 min read

By Robert Pasha

A new survey of in-house lawyers, released October 20, 2026, puts numbers on something many solo and small firms already feel. Clients know their outside lawyers use AI, and they expect to pay less because of it. In the Everlaw and Wakefield Research survey, 60% of in-house respondents said they expect lower fees or fewer billed hours from firms that use generative AI.

If you bill by the hour and AI makes you faster, your invoices shrink. If you bill flat fees, your margins can improve, but only if the fee is still reasonable for the work. Here is what the data and the ethics guidance say, and how to set prices that hold up.

What clients are saying

The Everlaw "In-House Innovation Report" surveyed 300 U.S. in-house legal professionals between June 26 and July 30, 2026. Key findings:

  • 86% use generative AI for legal work.
  • 54% say AI has already reduced the work they send to outside counsel.
  • 62% expect clear disclosure of AI use from their firms, and 61% expect measurable efficiency or outcome gains.
  • 81% expect outcome-based pricing to replace the billable hour within five years. 57% expect flat or fixed fees to be the most widely adopted alternative.
  • One third have encountered AI-hallucinated evidence or case law.

This is a corporate client survey, and many solo firms serve individuals. But the direction is the same for consumer clients, who already compare prices and like knowing the total cost upfront.

Small firms already offer alternatives

Flat fees are not new for small firms. In last year's Best Law Firms survey of 4,852 U.S. firms, published November 11, 2025, 72% of firms offered alternative fee arrangements, including 68% of firms with 2 to 19 lawyers. Among firms offering alternatives, 73% offered flat fees. At the same time, 58% of all firms said AI had not changed their billing practices.

That last number is the gap. Most firms have the tools to price differently. Many have not connected that to the time AI is saving them.

What the ethics rules say about billing AI work

The main national guidance is still ABA Formal Opinion 512, issued July 29, 2024. As The Tech Savvy Lawyer summarized on October 19, 2026, the opinion makes three points that matter for pricing:

  • Hourly means actual time. Lawyers who bill hourly "must bill for their actual time." You can bill for the time you spend prompting, reviewing, and editing AI output, not the time the work would have taken without it.
  • Flat fees still have to be reasonable. The opinion warns that "a fee charged for which little or no work was performed is an unreasonable fee."
  • General AI tools are usually overhead. Costs of "equipping and maintaining a legal practice" are generally not passed through to clients as separate charges.

State guidance points the same way. Bloomberg Law reported that the State Bar of Texas ethics committee said in Opinion 705 that lawyers cannot charge for time saved by using generative AI. One large firm's leaders put the hourly rule simply: "In hourly matters, we bill for the hours we actually worked, not what it might have taken without AI."

How to price AI-assisted work

Use flat fees where the work is defined

Flat fees work best for matters with a clear scope and a predictable path: simple estate plans, uncontested filings, demand letters, entity formations, lease reviews. Write down exactly what the fee covers and what costs extra. A clear scope protects you when a matter grows and protects the client from surprises.

Set the fee by value and risk, then sanity-check it

Price based on what the work is worth to the client, the skill and judgment it takes, and the risk you are taking on. Then check it against Opinion 512's warning. If AI does most of the drafting and your review is short, ask yourself whether the fee still reflects real work and real responsibility. Your review, judgment, and accountability for the result are the work.

Keep tracking time, even on flat fees

You cannot tell whether a flat fee is profitable, or reasonable, without knowing how long the work actually takes. Time records also help if a client or a bar ever questions a fee. Capturing time does not have to be manual. LawMOR, for example, files calls and texts on the firm's number to the right matter and drafts private time entries from the measured call length for you to review.

Be honest about hourly work

If a matter is hourly, bill the time you spent. Do not pad entries to make up for time AI saved. If faster work is shrinking your hourly revenue, that is a reason to move suitable matters to flat fees, not to change your time records.

What to do this week

  1. Pick three matter types you handle often and that AI has made faster. Draft a flat fee and a written scope for each.
  2. Pull time records for your last five matters of each type to see what they actually took.
  3. Update your engagement letter. Say what the fee covers, and add a short, plain paragraph on how you use AI and protect client information. Clients increasingly expect it.
  4. Review any AI surcharges. If you pass through the cost of general AI tools, compare that practice to Opinion 512 and your state's guidance.
  5. Audit a recent hourly invoice. Make sure every entry reflects actual time spent.

This post is general information, not legal advice; check your state's rules on fees and any state ethics opinions on AI billing.

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