Law firms bill clients by the hour. AI is beginning to reshape that model
Artificial intelligence (AI) has reduced the time for research and documentation by 20-30%, and even more in big cases, according to law firms. Even clients have started demanding clarity on the use of AI-powered tools.
“Consider an arbitrator or a lawyer with 10,000 pages in a case, needing a chronology of events. Previously, this might have consumed a month. With Jurisphere (an AI tool), it takes under ten minutes,” said Varun Khandelwal, founder of the Greater Noida-based platform offering AI services to law firms.
“With generative AI, the fundamental impact extends to 40–60% of daily legal workflows, and this figure will rise as AI capabilities deepen,” Khandelwal told Mint. “We have seen adoption skyrocket, both among the largest law firms in India and at the Supreme Court level.”
Jurisphere’s clients include MZM Legal, Veritas Legal, Wadia Ghandy and IndusLaw. Such tools use generative AI, which can create text or images based on patterns and data fed to it during training.
AI is primarily used in law firms for legal research, document review, organizing and summarizing large volumes of documents, tabulation, compliance reviews, and drafting standard contracts or letters. It automates manual and time-consuming tasks. However, complex legal analysis, negotiations, and final legal judgments still require extensive human oversight and expertise.
The larger law firms are prepping for “hybrid billing”, a mix of fixed or flat fees for AI-driven work regardless of the time spent and hourly billing for more complex legal advice.
“The introduction of AI-powered legal research tools has not yet changed the way the firm bills clients. But we can clearly see we’re headed in that direction,” said Suchorita Mookerjee, chief technology officer at MZM Legal. This Mumbai- and Delhi-based law firm, which has expertise in white collar crime cases, saw a 25% drop in research efforts, though it had to increase quality checks.
According to a Mumbai-based senior partner at one of the top three law firms, clients have started asking them how much of the work is done by AI. “We have to disclose the quality and the quantity of work done by our in-house AI tool,” said the partner who did not wish to be named. “The billing is getting decided only after that. In case a law firm chooses not to come forth, there is always a risk that the client may find out from its own checks and balances.”
Open to using AI
Smaller law firms, especially those that work on a fixed fee, were among the first to try out new AI tools. “We have not reached a stage where cost-efficiency through AI can be passed on to clients,” said a partner at a Mumbai-based boutique firm. “Small-to-medium-sized law firms bleed on fixed fee mandates, and the legal AI research tool can operate to save the leakage by minimizing it.”
Two tools came close to their needs: LegitQuest for deep corporate research, and Jurisphere for more basic, chat-based work.
“These tools are being increasingly used in diligence and other tasks where workflows can be engineered and firms can issue SOPs for the same,” said the partner. “But today, most firms are still experimenting and focused on internal efficiency, not reworking bills to clients.”
Legal consulting firm Lawfinity Solutions found that law firms and their clients are now open to using AI tools.
“Across 50+ firms that we consult, most have not fundamentally changed their billing models yet, but there is significant pressure building,” said Prachi Shrivastava, founder of Lawfinity Solutions. “The progressive firms are beginning to experiment with value-based pricing for research-heavy matters.”
Of the 67 lawyers interviewed by Lawfinity, about 60% still use traditional hourly billing, but 40% are experimenting with flat fee or milestone-based models.
“Lawyers working with fintech, healthtech, and SaaS clients are more likely to offer fixed fees for routine legal research, largely because these tech-savvy clients expect predictable pricing structures similar to what they see in software,” Shrivastava said.
Some law firms are using the time saved with AI to offer more in-depth analysis to their clients. That may keep the billing rates unchanged for some time.
“AI is not replacing the lawyer; it is making the lawyer sharper and faster. We still rely on our legal judgment, but AI helps us get to the relevant information quicker,” said Rohit Jain, managing partner at Singhania & Co. “There is definitely a 20–30% dip in time for things like case law research or jurisdictional comparisons”.
Legora, a Stockholm-based collaborative AI that helps lawyers review, research and draft faster, recently partnered with Indian law firm Cyril Amarchand Mangaldas.
“After an extensive pilot period following CAM’s vision to become an AI-first organization, Legora was rolled out firmwide,” a spokesperson at Legora told Mint. “The pilot captured real-life use cases and measured ways it saved time and improved accuracy, while addressing existing challenges.”
Cyril Amarchand Mangaldas did not respond to Mint’s queries.
Cautious adoption
Some law firms are still evaluating AI. “Bespoke AI tools for drafting complex transactional work are still maturing, and AI ‘hallucinations’ mean cross-checking is necessary,” noted Satish Kishanchandani, managing partner, Pioneer Legal.
A bespoke AI tool is a tailormade, customized application that helps solve unique challenges more effectively than generic solutions. AI hallucination occurs when it generates misleading or incorrect resuts.
“It is still too early to clearly quantify the tangible benefits and efficiencies derived from AI,” cautioned Haigreve Khaitan, senior partner at Khaitan & Co. “Our billing models are aligned with industry standards, and we remain flexible to adapt to our clients’ specific requirements and objectives.”
Adil Ladha, partner at Saraf & Partners, agrees that generative AI may lead to greater efficiencies, but its impact on billing models may not always be direct and proportional in the Indian market.
Venkatesh Raman Prasad, partner at JSA Advocates & Solicitors, however, emphasized that human insight remains essential.
“While AI tools can reduce the time spent on routine, document-heavy tasks, the reduction in client bills depends on permissible use under engagement letters and the complexity of the matter,” Prasad said. “AI’s efficiencies may be shared as quicker turnarounds or improved quality, not always through lower fees.”
Still, Shrivastava of Lawfinity Solutions expects AI to shake up billing models. “Firms that properly train teams report 30–40% time savings,” she said. “But AI is forcing a more pertinent question: if research that used to take four hours now takes one, what exactly are clients paying for?”