A UK law firm chief asks how to bill for talking clients out of their own AI strategies
HSBC's survey of 100 UK law firms finds 60% citing clients bringing work in-house and almost three-quarters citing technology as a disruptor. The figures record perception, and the pricing question comes from one chief executive.
The Board Room · Leadership desk
Key figures from HSBC's survey of 100 UK law firms: 73 per cent of firms called effective AI integration a major organisational challenge, the most cited, and 60 per cent of firms cited clients bringing more work in-house.
| Figure | Value | Note | Claim |
|---|---|---|---|
| Firms calling AI integration a major challenge | 73% | most cited organisational challenge | 6 |
| Firms citing clients bringing more work in-house | 60% | HSBC survey, as reported by City AM | 3 |
| Firms in HSBC survey | 100 UK law firms | 1 |
What happened
- Almost every firm in the survey already has a generative AI strategy, and senior leaders are now focused on embedding the technology securely and effectively.
- Effective AI integration was the organisational challenge cited most often, with 73% of firms calling it a major challenge.
- Firms named four barriers: time to explore the AI market, legacy systems and data, cost, and uncertainty over return on investment.
Why it matters
- decision Each engagement now forces a choice between billing the time spent advising against a client's AI plan and absorbing it in margin.
- exposure Firms that recommend or build AI tools for clients may be supplying the route clients use to bypass paid advice, according to Knights' David Beech.
- cost Firms pay for AI integration and legacy-system work with uncertain returns, out of the same revenue model whose pricing is in question.
The survey measures what firms say, and that limits what it can prove. The two headline shares count respondents who named a driver of disruption in HSBC's yearly survey [1][2][3]. City AM's account does not report hours billed, fee levels, the share of fixed-fee work, or how often clients bring their own AI strategies to meetings. So the data supports a finding that firms perceive pressure on the billable hour, and it stops short of showing the hour shrinking.
The sharpest statement of the pricing problem comes from one executive. Helen Drayton, chief executive of Pennington Manches Cooper, said: "Some clients can also arrive at meetings with their own AI-generated strategies which the lawyer must spend time advising against. How do you decide how to charge for that?" [11] City AM describes firms as "scratching their heads" over how to charge for specialised services historically billed by the hour [12]. That description is the newspaper's, and Drayton's example is a single firm's experience.
In our view the choice has two sides, and each has a cost. A firm that bills the rebuttal at its hourly rate risks a client who objects to paying to correct a plan it produced with its own tools. A firm that absorbs the time protects the relationship and carries the cost in its own margin. Whichever the firm picks in this quarter's engagement terms will show up in next quarter's margin on those matters.
Knights chief executive David Beech frames the response as retention. He said the pressure "finds firms more pressured to make the case for an ongoing relationship and regular work where they believe they continue to add most value to a set of problems" [5]. That moves the argument onto scope: a firm has to name the problems it still solves better than a client's tools do.
HSBC's Victoria Ritchie, head of professional and business services, told City AM that AI is "already challenging the traditional law firm operating model, accelerating changes in how legal services are delivered, priced and resourced" [9]. Sam Elkin, finance director at Roythornes, said firms are "now wrestling with a very different dilemma: what a fresh wave of potentially transformational technology will now mean for the business model of a law firm as pressure builds to see advantages of genAI investment" [10]. Both statements describe a model under strain. Until firms' own fee data says otherwise, we would treat the billable hour as under reported pressure.
What to watch
- Whether listed firms such as Knights report fee-structure, hours or fixed-fee figures that show the billable hour moving.
- Whether firms write a stated rate or scope into engagement terms for reviewing client-generated AI work.
- Whether HSBC's next yearly survey repeats the 60% in-house figure or shows it rising.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence40
- Adoption45
- Hype gap+25
- Incentives55
- Confidence50
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
HSBC's yearly UK Law Firm Strategy and Investment Survey covered 100 UK law firms surveyed by the bank.
- [2]
Almost three-quarters of the 100 law firms surveyed said greater use of technology in legal delivery is driving disruption.
- [3]
60 per cent of the surveyed firms cited clients bringing more work in-house.
- [4]
David Beech, chief executive of London-listed law firm Knights, said many clients' General Counsels may even be using AI solutions that partner firms have themselves recommended or developed to meet their needs.
- [5]
Beech said: "This finds firms more pressured to make the case for an ongoing relationship and regular work where they believe they continue to add most value to a set of problems."
- [6]
Of the organisational challenges HSBC asked about, effective AI integration was the most frequently cited, with 73 per cent of firms calling it a major organisational challenge.
- [7]
Almost every firm surveyed has a generative AI strategy in place, and senior leaders are focused on embedding the technology securely and effectively.
- [8]
Barriers firms cited include having the time and opportunity to explore the AI market, legacy systems and data involved in implementation, cost, and uncertainty over return on investment.
- [9]
Victoria Ritchie, head of professional and business services at HSBC, told City AM that AI is "already challenging the traditional law firm operating model, accelerating changes in how legal services are delivered, priced and resourced."
- [10]
Sam Elkin, finance director at Roythornes, said law firms are "now wrestling with a very different dilemma: what a fresh wave of potentially transformational technology will now mean for the business model of a law firm as pressure builds to see advantages of genAI investment".
- [11]
Helen Drayton, chief executive of Pennington Manches Cooper, said: "Some clients can also arrive at meetings with their own AI-generated strategies which the lawyer must spend time advising against. How do you decide how to charge for that?"
- [12]
City AM reports that corporate clients' use of in-house legal teams and AI tools is leaving firms "scratching their heads" over how to charge for specialised services historically billed by the hour.
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Sources
1 independent publisher whose own reporting we read for this story.
- cityam.comLaw firms’ billing model faces disruption as clients turn to AI DIY advice
1 article · October 14, 2026
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