I recently attended Sandpiper Partners’ sixth annual Law Firm Profitability, Pricing and AI Conference at Wilkie Farr and Gallagher’s Chicago offices. A consistent theme ran through the discussions. The legal market is moving beyond early AI adoption, experimentation, and pilots, and into the harder work of turning it into measurable commercial or strategic value. 

Firms are seriously considering how AI might affect their business model (aka the billable hour), leverage models, pricing, profitability, client service delivery, and how they manage their clients’ rapidly evolving expectations. Not to mention the raw cost of AI tools and the effect on the bottom line. 

This is a meaningful shift - AI is no longer just a shiny new object. It is here to stay and will reshape the way most businesses, including the legal industry, operate. Just like the introduction of the internet, emails, and smartphones on a larger scale. Even e-Discovery, online legal research with LexisNexis and Westlaw, at a smaller scale, back in the day. 

Most panelists, interestingly, including Ryan Samii, Head of Product Innovation at Harvey, admit that despite eye-watering costs, the ROI of AI tools remains elusive. As Wilkie Farr & Gallagher’s Chairman, Craig C. Martin, noted, investment in AI is already nearly the same as the firm’s investment in real estate. Just. Think. About. This.  

At the same time, the fear of falling behind and losing the competitive edge is too real to ignore. 

A whole host of concerns surfaced during the discussion. Clearly, this is a time of both risk and opportunity, and some of the brightest minds in the industry are actively engaged in finding the best path forward. 

One of the obvious concerns, mentioned by several panelists is that, since AI tools can deliver high-quality, lower-value legal work within seconds (think drafting, summarization, contract review, due diligence, regulatory monitoring), rather than hours or even days, the billable hour model, the way we know it, will no longer be relevant.  

Then, what about the traditional leverage model, justifying rate increases, and AI-enabled corporate legal departments that continue to retain more work in-house? 

What about scoping and pricing matters competitively and winning work while staying profitable? 

How real are those concerns? Well, let’s take it one step at a time. 

The Billable Hour 

While the billable hour feels like an ancient tradition, it’s actually a relatively modern invention. The concept of the billable hour is believed to have emerged in 1913 to reduce cost of each case and deliver more value by accurately tracking the hours each lawyer spends on each matter.  

I argue that despite AI disruption, it will remain as such, but new ways of pricing and delivering value will emerge. While AI threatens to diminish the value of routine, repetitive work, it emphasizes the importance and relevance of human judgment, the ability to connect, empathize, and share risk with the client.  

Human Judgment and Bespoke Client Counseling 

Neal Kumar Katyal, who won the trillion-dollar Supreme Court case in November 2025, exemplifies this perfectly. While he did use AI tools in preparation for the hearing, could the argument have been won without AI? Possibly. Could it have been won without Neal’s experience, ability to read the room, connect, and be human? The author of this article greatly doubts it.

Tasks like strategic decision-making, risk assessment, negotiation, and bespoke client counseling are tasks clients least want automated and are most willing to pay for. 

At the same time, as Professor Richard Susskind keeps reminding us, clients don’t want lawyers; they want outcomes. So, what if AI substantially reduces demand for legal services? This would lead to intensified competition for a shrinking pool of client work and, as a result, produce downward pressure on rates, particularly in saturated segments of the market.  

As Paul Nicandri, Chief Pricing Officer of DLA Piper, noted, firms will either need more clients, which means a more competitive business landscape, or more AFAs to recoup the loss of billable hours, which is often driven by the clients.  

This is the intersection of innovation and strategy everyone is talking about. 

Operationalizing business teams (marketing and business development, pricing and legal project management, legal operations, knowledge, finance, and on-the-ground lawyers) will become front and center.  It also means increased attention to matter outcomes, margin, and client reporting. 

Pricing Must Become More Practical 

The pricing issue is simple to state but difficult to solve: if AI changes how work is done, firms need to put systems in place to price that work and protect margin. 

Clients are asking how AI affects cost, and firms are under pressure to explain that clearly. As Paul Nicandri described, fee structures, AFAs specifically, are increasingly about balancing risk and certainty between firm and client.  are increasingly about balancing risk and certainty between firm and client.  

Internal teams are also trying to understand how efficiency should feed into scoping, staffing, budgeting, and fee structures. Pricing cannot sit at the end of a matter as a tidy-up exercise. Khader Hawa, Director of Pricing & Legal Project Management at Michael Best & Friedrich, emphasized how scoping, effective legal project management, and timely client communication will deliver unique client value and represent a competitive advantage for law firms 

In a nutshell, this means firms need to leverage institutional knowledge (assuming they have clean timecard data for prior matters), price with confidence, track budgets, adjust when the scope changes, and communicate with the client before resorting to costly write-offs and write-downs. 

I also predict that over time, LLM-based AI tools will become commoditized and far less costly, which will lower the price of admission for mid and small-sized firms and will ultimately start leveling the playing field. The differentiator will be the quality of data and whether AI is, indeed, in service of the firms’ overarching business strategy.