One in five UK and Irish law firms deep into AI report trouble meeting billable-hour targets

Under an hourly bill, the time AI saves goes to the client. A&O Shearman says some tasks now take minutes where they used to take several hours ^[4], and that work gets billed in minutes unless the firm prices it some other way. "You can't charge 16 hours for something that takes 16 seconds," Nick Rowles-Davies, founder and chief executive of the legal finance fund Lexolent, told CNBC ^[6]. He said routine drafting is the most exposed: "If you've got standard documents and you're just putting in detail, then clearly that's an automatic process" ^[9].

The saving can go three ways. Clients can take it as smaller bills. Firms can use the freed hours for more matters. Clio, whose survey found almost 90% of UK and Irish legal professionals using AI ^[1], reported that almost 80% of firms using AI already handle more work without adding resources ^[2]. Or firms can charge by the job and keep the margin. The senior legal leaders in a Deloitte survey expect that third route: if the hourly share falls from 72% to 44% within two to three years ^[7], the share of work priced some other way doubles, from 28% to 56% ^[17].

We think volume comes first, because it needs no change to how clients are billed and Clio's figure says it is already happening. The Deloitte number is a global forecast of what leaders expect ^[7]. The trouble with hour targets at about a fifth of heavy adopters is what UK and Irish firms report now ^[8]. The counter-case is demand. Extra capacity only pays if clients send more work, and if they do not, more firms miss their hour targets and have to reprice. Mansoor Soomro, who leads the Future of Work Research Unit at Teesside University, told CNBC the billable hour is not disappearing overnight but is getting harder to justify ^[10]. If the next Deloitte reading shows the hourly share already well below 72%, repricing is moving faster than volume and our view is wrong.

So far the cost savings come out of administration. Over 70% of AI-using firms told Clio the software cut costs by taking on administrative work once done by support staff ^[3]. Combine that with the 80% taking on more work without more resources ^[2], and what these firms are not spending on is new hires.

Of the two firms named, only Slaughter and May is described as using Harvey in every practice area ^[5]. A&O Shearman's described use is agents built for particular tasks ^[4].

Soomro said repetitive work is how junior lawyers learned the basics: reviewing hundreds of documents taught them what matters, and writing up contracts honed their drafting ^[11]. In our view clients paid for that training too, one billed hour at a time. Once software does the review, the firm either pays for the training itself or ends up with fewer trained lawyers. Harvey's head of EMEA, Jorge Bestard, made the same point from the vendor's side: "A faster route to a draft does not automatically mean a faster route to competence," he told CNBC ^[12]. Francesca Bennetts, A&O Shearman's head of legal talent, said the firm is building career paths in legal engineering, product and AI delivery that "barely existed a few years ago" ^[13]. "The need to develop exceptional lawyers doesn't go away," Bennetts said ^[14].

Clio found that 51% of legal professionals work evenings while 32% want to, and that 22% work weekends against 11% who would choose to ^[15]. If firms take the volume route, that 19-point gap on evenings ^[18] stays where it is. Joshua Lenon, Clio's lawyer-in-residence, gave a different account, telling CNBC that lawyers are saying their day is getting better ^[16].