Billing for AI work: what to do when the task takes ten minutes

By Michael Nadalin, Founder, Market Lead · 14 August 2026 · 8 min read

A solicitor asks a research question about a limitation period argument on a Friday afternoon. Two years ago that is a three hour job: pull the authorities, read the judgments, check whether the leading case has been followed or distinguished, write a file note. Now the first draft of that note lands in about ten minutes, and the remaining work is reading the cases properly to confirm the draft is not wrong.

So what goes on the timesheet. Ten minutes at the charge out rate is $60 or $70 of revenue for work the client would have paid $900 for, and the client got the same answer either way. Nobody in the firm wants to be the first person to say this out loud, so the units quietly stay where they were, and everyone hopes the question does not come up at a costs assessment.

That is the actual problem, and it is a pricing problem wearing a technology costume. The billing structures that answer it already exist in Australian practice. What most firms have not done is decide which one they are using, write it into the costs agreement, and tell the client before the work starts rather than after.

The ten minutes is not the whole job

Before you redesign your billing, be honest about what actually got faster. On a research question, the compressed part is the first pass: finding the relevant provisions, surfacing candidate authorities, producing a structured summary. That was never the expensive part of the work in terms of judgment. It was expensive in terms of hours, which is why it earned so well.

What did not compress is the verification and the application. You still have to read the judgment rather than the summary of it. You still have to check the legislation is in the form that applied at the relevant time. You still have to work out whether the principle survives contact with the facts of your client's file, which is the part a client cannot do and the part a tool cannot do either.

Firms that bill the ten minutes and stop there are usually not billing the ten minutes. They are failing to record the forty minutes of checking that followed it, because checking does not feel like work in the way that reading a judgment start to finish did.

The four things firms are actually doing

Talk to enough practice managers and the responses sort into four buckets. Only two of them survive scrutiny.

The first bucket is doing nothing and billing the historical time. This is the one that ends badly. If the file goes to a costs assessor, or the client asks for an itemised bill, you are asserting hours that were not worked. That is a disclosure problem and a professional conduct problem, not a pricing debate.

The second is billing the real time and absorbing the revenue drop. It is defensible and a lot of firms are quietly doing it, but on a pure hourly model it punishes the practitioner who works out how to do the job in a quarter of the time. That is a strange incentive to build a practice on.

What the costs rules actually require

The Legal Profession Uniform Law, which applies in New South Wales, Victoria and Western Australia, requires that legal costs be fair and reasonable, and that they be proportionate to the work. Queensland and the other jurisdictions have their own legislation with a similar shape. None of it says you must bill by the hour. Plenty of it says the client must be told the basis of your charges before you start, and told again when your estimate changes materially.

That matters here in a specific way. Moving from hourly to fixed fee mid retainer is a change to the basis of charging, and it needs disclosure and agreement, not a line in the next invoice. Equally, if your estimate was built on the old timeframes and the work now costs the client far less, that is a material change to the estimate and the client is entitled to hear about it.

The other question that comes up: can you pass on the subscription as a disbursement. Generally no, unless it is a genuine outlay attributable to that matter and it was disclosed. Most firms are treating these tools the way they treat their practice management system and their legal research subscription, as overhead recovered through the charge out rate or the fixed fee.

Where the time goes now, and what that says about price

Look at the shape of a research task once the drafting collapses. The tool's own run time rounds to nothing. Prompting is small. Almost all the remaining effort is reading source material to confirm it says what the draft claims, and applying it to the facts. Those two things are judgment, and judgment is what the client is paying a solicitor for.

That reframes the pricing conversation usefully. You are not selling three hours of reading any more. You are selling a verified answer with your name on it and your insurer behind it, which is a different product with a different value and, notably, an unchanged risk profile. The Australian courts have issued guidance on the use of generative AI in litigation, and none of it reduces your responsibility for what you file. The buck did not move.

The practical consequence: price the deliverable, record the time anyway. Time recording stops being your invoicing engine and becomes your costing and capacity data. You need it to know whether your fixed fee is profitable, to justify costs if the matter is assessed, and to work out which files are quietly bleeding.

Changing your billing without starting a fight

The failure mode is not the new pricing. It is announcing it badly, or worse, saying nothing and letting a client work out from an invoice that they paid four hours for something that took forty minutes. Clients rarely object to a firm getting faster. They object to finding out sideways.

Do it on new matters first. Pick one or two matter types where the scope is genuinely predictable, a straightforward contract review, a standard advice, a discrete research question, and quote them fixed. Keep everything else hourly while you gather cost data. Six or eight weeks of recorded time against fixed prices tells you whether your number is right, and it does that before you have committed the whole practice to it.

The uncomfortable part

The hourly rate has always had a quiet problem: it prices input rather than output, so it rewards the slow and penalises the efficient. Practitioners have lived with that because the two were roughly correlated. Better work usually did take longer. That correlation is weakening, and the firms that keep pretending otherwise will end up either overcharging or undercharging, both of which are visible from outside.

Two things stay true no matter which model you land on. Record the time honestly, because you need it for costing, for any assessment, and for your own sanity about which matters are profitable. And bill for the verification, because that is the work that makes the output usable. A summary you have not checked against the actual judgment is not advice, and the fastest way to turn an efficiency gain into a professional indemnity claim is to skip that step to protect a margin.

That is also the honest test for any research tool you bring into the practice, including ours at Legal Brain. If it hands you a summary without letting you get to the source text quickly, it has moved your work rather than reduced it, and you will pay for that difference twice: once in the checking, and once in whatever you missed.

Frequently asked questions

Can I bill a client for the time the work used to take if AI did it faster?

No. Recording hours that were not worked misstates the bill, and it will not survive an itemised bill request or a costs assessment. If you want the value of the efficiency, price the deliverable as a fixed fee disclosed before the work starts, rather than inflating the units.

Do I have to tell clients that I used AI on their matter?

There is no blanket obligation in the Uniform Law to disclose the tools you use, in the same way you do not disclose which research database you searched. Confidentiality is the live issue: putting client material into a tool that trains on it or stores it offshore raises duties you do need to address. Court proceedings are different again, since several Australian courts have issued specific guidance on generative AI in litigation.

Should our firm move from hourly billing to fixed fees because of AI?

Move the matter types where scope is predictable and leave the rest alone for now. Run fixed pricing on new engagements only, keep recording time behind the fixed fee so you can see the real margin, and review after a full quarter. Changing the basis of charging on a live retainer needs fresh disclosure and the client's agreement.

Can the cost of an AI research subscription be charged as a disbursement?

Usually not. A disbursement is a genuine outlay made on the client's behalf for that matter, and a firm wide subscription does not fit that description. Most Australian firms treat it as overhead recovered through the charge out rate or the fixed fee, the same way they treat their practice management and legal research subscriptions.