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AI adoption in UK and Irish law firms puts the billable hour under pressure

Clio report finds near-universal use, while Deloitte survey predicts sharp fall in hourly billing

By LineZotpaper
Published
Read Time2 min
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Artificial intelligence is now used by almost 90% of legal professionals in the UK and Ireland, according to a new report, and the technology is forcing law firms to rethink the billable hour, one of the profession's oldest conventions.

Legal software company Clio's UK & Ireland Legal Insights Report 2026 found that among firms using AI, almost 80% said they can handle more work without increasing resources, while over 70% said it cut costs by absorbing administrative work once done by support staff.

Some of the UK's biggest firms are already putting AI to work. A&O Shearman has partnered with legal AI company Harvey to develop agents that review loan agreements and analyse regulatory filings, completing in minutes work that previously took several hours. Slaughter and May has rolled out Harvey across all practice areas this year for regulatory research and document analysis.

The economics of the billable hour become less straightforward when AI dramatically reduces the time lawyers spend on documents. "You can't charge 16 hours for something that takes 16 seconds," Nick Rowles-Davies, founder and CEO of legal finance fund Lexolent, told CNBC.

About one in five firms that have widely adopted AI report difficulty meeting billable-hour targets, according to Clio. Globally, senior legal leaders expect the share of work charged by the hour to fall from 72% to 44% over the next two to three years, a Deloitte survey found.

Routine work is the most exposed, Rowles-Davies said. "If you've got standard documents and you're just putting in detail, then clearly that's an automatic process." But complex legal work still requires human judgment, particularly when interpreting AI output and determining strategy for a client.

Clio's lawyer in residence, Joshua Lenon, said lawyers are telling the company "that their day is getting better." The report also warns that lawyers need to be able to spot AI hallucinations, a growing concern as reliance on the technology increases.

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Analysis

Why This Matters

  • The billable hour underpins how most law firms charge clients, and AI threatens that model by compressing hours of work into minutes.
  • With nearly 90% of UK and Irish legal professionals using AI, the shift is already happening across the profession, not in isolated corners.
  • Clients could see lower fees and faster turnarounds, but lawyers' pay structures and training pathways will need to adapt.

Background

The billable hour has been a hallmark of legal practice for decades, rewarding time spent rather than outcomes achieved. AI tools that can review contracts and regulatory filings in minutes upend that logic. Large UK firms are now deploying AI assistants such as Harvey, and smaller firms are following through broadly available legal software. The result is growing pressure on firms to move toward fixed fees or value-based pricing, a transition that affects partners, associates and clients alike.

Key Perspectives

Law firm leaders: AI lets firms take on more work without adding staff and cuts administrative costs, but a fifth of heavy adopters struggle to meet billable-hour targets, which affects revenue and performance reviews. Clients: Corporate legal buyers stand to benefit from lower bills and faster service, but they will want assurance that AI output is checked by qualified lawyers, especially where errors are costly. Junior lawyers and trainees: AI removes much of the routine document work that traditionally trained new lawyers, raising questions about how the next generation will learn the job. Critics and skeptics: AI can still hallucinate, and the report notes lawyers must be able to spot such errors. Complex matters still require human judgment, meaning automation has clear limits.

What to Watch

  • Whether leading firms publicly shift from hourly billing to alternative fee arrangements over the next year.
  • The Deloitte prediction that hourly billing's share of work will fall from 72% to 44% within two to three years.
  • How legal education and on-the-job training change as AI eliminates entry-level grunt work.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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