"This may be the last year that law firms can expect billing rate increases to drive financial stability, according to a new survey of more than 800 senior finance and legal professionals in large firms across North America, the United Kingdom and Ireland. Technology company BigHand's 2026 finance report suggests that firms can no longer rely on traditional measures of profitability, as clients are demanding more efficiency and predictability amid the increased adoption of artificial intelligence across the legal profession, according to Law.com."
""[What] remains to be seen is, ... although they're being requested more often, are [alternative fee arrangements] actually being deployed more often," Wangler said. "As firms become more efficient, start using AI more effectively, the pressure on them to pass those efficiency savings on to their clients will definitely be there." According to Law.com, Wangler also expects clients to increasingly demand outcome-based pricing, rather than hourly billing, and firms that agree to these new arrangements could outperform their competitors."
A survey of more than 800 senior finance and legal professionals in large firms across North America, the United Kingdom and Ireland found that billing rate increases can no longer be relied on to drive financial stability. Clients are increasingly demanding efficiency and predictable pricing as artificial intelligence adoption grows within legal services. Forty-seven percent of firms reported increased client demand for alternative fee arrangements last year, with similar or higher demand expected this year. Law firms that deploy AI effectively and shift toward outcome-based or alternative fee pricing will face pressure to pass efficiency savings to clients and may outperform competitors.
Read at ABA Journal
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