Large corporate clients are pressing law firms to show how artificial intelligence is lowering their legal bills. The push comes as UK lawyers debate how to charge for work that AI now finishes in far less time.
Lloyds Banking Group and Compass Group are among the companies asking firms for clearer answers. Their in-house lawyers spoke at a recent event hosted by data and intelligence firm Chambers.
Clients Want Savings Passed On
Fiona Day, deputy general counsel at Lloyds Banking Group, said the bank no longer asks law firms only for a price. It now asks whether they use AI and expects them to be open about the pricing and savings linked to it.
Day said the bank is changing how it works with outside firms. She added that it will keep asking for that transparency.
James Kachel, general counsel at Compass Group, said the company has completed several acquisitions around the world in recent years. He said law firms have invested heavily in AI, but legal costs per deal have not dropped far enough.
Kachel said the firms that come out on top will be those that drive efficiencies. He said those firms must also share the benefit with their clients.
The Law Society updated its guidance last month to address the issue. It says that where fees are based on time, lawyers may record and bill only time properly spent.
The guidance says firms should not bill for the time a task would have taken without AI. Time spent running the AI system, checking its output, making changes and applying professional judgment may still be charged if it matches the client care letter.
Costs Lawyers Say Human Judgment Still Matters
The billing question also came up at the Association of Costs Lawyers annual conference in London on November 6. Costs lawyers review and argue over legal bills, work that relies heavily on documents and set rules.
Some might expect that field to be highly exposed to AI for that reason. Delegates at the meeting stressed that human input will remain essential.
Joanne Powell, a costs lawyer and deputy director at the Government Legal Department, said AI is useful for drafting, document review and data extraction. She said human judgment is still needed for nuanced, tactical strategy, and AI cannot provide that at present.
Lady Justice Cockerill, deputy head of civil justice, urged delegates not to feel discouraged by technology. She said lawyers must keep asking what exactly the machine is doing.
Cockerill questioned whether AI can tell if work on a bill was necessary or explain why a category fits. She also asked whether it truly understands what is at stake for the parties.
She said a change in how legal work is produced will lead to a change in how its value is measured and charged. She added that costs lawyers have room to lead that discussion.
The conference also covered how lawyers treat their opponents. Costs Judge Joseph said he had seen a trend of lawyers repeatedly calling the other side’s costs bills “laughable.”
Joseph said such language may impress clients but does little to impress judges. He strongly encouraged delegates to stop, saying there is no need to be so rude about an opponent’s drafting.
