"There is growing agreement across the legal industry that artificial intelligence may mark the end of the billable hour. When intelligent systems can complete discrete legal tasks faster, more consistently, and at lower cost, time stops working as a credible proxy for value. For in-house legal teams, this shift should feel overdue. The billable hour has long ignored outcomes, rewarded inefficiency, and complicated efforts to align legal spend with deliverables and results."
"Many corporate legal departments have long pushed for alternative fee arrangements,though not all such arrangements represent true value-based pricing. Capped fees, blended rates, and tiered discounts remain hourly-based and carry the same fundamental problems. True value-based (VBP) pricing requires fixed fees and other non-hourly fee structures for defined scopes of work. As AI accelerates this transition, the more complex question is not whether time-based pricing will survive. The better question is what replaces it, and who is actually ready for that change."
Artificial intelligence threatens the billable hour by enabling faster, more consistent, and lower-cost completion of discrete legal tasks, breaking the link between time and value. In-house legal teams have suffered from hourly billing that ignores outcomes, rewards inefficiency, and obstructs alignment of legal spend with deliverables. Many alternative fee arrangements remain hourly-based and fail to deliver true value-based pricing. True value-based pricing requires fixed fees and non-hourly structures for defined scopes. AI accelerates the shift; the pressing issues are what will replace time-based pricing and whether legal organizations are operationally prepared. Major shifts often begin as subtle signals when hard, expensive tasks become easy and inexpensive.
Read at Above the Law
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