Rita McGrath is very close to the mark in her The Wall Street Journal article (“Say Goodbye to the Billable Hour, Thanks to AI”; December 4, 2025) when she says “the fundamental logic of charging for time spent rather than value delivered is becoming increasingly untenable.”  In fact, for transactional work, it already is untenable to charge based on time spent.

Even before AI, the billable hour was under severe pressure for transactional work. Take, for example, a $10M construction project for a retail center. There’s a line item in the project budget for lender’s legal fees, say $10,000. If lender’s counsel totals their billable hours on the loan (across partner, associate, and paralegal time) and arrives at $15,000, they cannot reasonably expect to be paid that amount.  If the lender’s counsel presents a $15,000 bill, they will almost certainly be asked to reduce it. The economics of the deal simply don’t support that fee. The borrower (who ultimately pays the bill) and the lender may acknowledge that there was some “hair” on the deal that increased the work involved. But at the end of the day, they will conclude that the excess reflects inefficiency, not added value. And because the deal doesn’t support a $15,000 fee, the lender’s counsel can’t charge it, no matter how many billable hours were logged.

Many (if not most) law firms have been slow to embrace AI largely because they fear it will reduce billable hours. If, for example, loan documents can be drafted in 10 minutes instead of three hours, that’s 2.9 fewer hours to bill under a traditional hourly model. In that scenario, the billable hour actively penalizes efficiency.

And yet, the value of that work hasn’t decreased. If anything, it has increased. Drafting accurate, well-structured loan documents in minutes is worth far more than 10 minutes at an hourly rate. The pricing model, not the work, is what’s broken.

Thus, the billable hour no longer makes sense for anyone. It doesn’t work for borrowers and lenders (or any consumer of legal services), and it increasingly doesn’t work for law firms either.

The firms that recognize this shift early and embrace AI-driven efficiency will thrive. They’ll deliver more value, provide better service, and align pricing with outcomes, not time spent.

Jeff Livingston, Aeon Legal Tech