AI and in-house legal teams disrupt law firm billing models

The traditional revenue models of law firms are facing disruption as corporate clients increasingly utilize in-house legal teams and artificial intelligence tools to manage work internally.

According to the HSBC UK Law Firm Strategy and Investment Survey, nearly 75% of surveyed firms report that increased technology use in legal delivery is driving disruption, while 60% noted that clients are bringing more work in-house. This shift challenges the historical hourly billing model, as clients use AI to perform tasks or develop strategies independently.

Legal executives noted that some clients now arrive at meetings with AI-generated strategies that require lawyer intervention, complicating how specialized services are billed. Additionally, some clients are using AI solutions that law firms themselves previously recommended or developed, forcing firms to justify the ongoing value of their professional relationships.