Artificial intelligence can reduce the time required for research, drafting, document review, and contract analysis. That efficiency creates an increasingly practical question: if a lawyer uses AI, what may the firm charge the client?
The short answer is that AI does not create a separate exemption from ordinary billing rules. Lawyers still need to charge reasonable fees, record the time actually spent when billing hourly, explain client expenses, and comply with the governing engagement agreement and professional rules.
A recent federal appellate decision adds an important point. A client cannot establish excessive billing merely by showing that the law firm used AI. The challenge still needs evidence connecting the technology to unreasonable hours or charges.
What the New Federal Ruling Actually Said
In an October 30, 2026 opinion, the United States Court of Appeals for the Tenth Circuit affirmed an attorney-fee award after the opposing parties argued that the prevailing firm's use of AI and online research tools should have reduced the time required.
The court did not announce that every AI-related charge is reasonable. It concluded that the challengers had not produced evidence showing that counsel's actual hours were unreasonable. The opinion also recognized that technology may reduce the number of hours needed for research in an appropriate case.
That distinction matters. The ruling addresses proof and fee records, not a blanket right to bill the same number of hours regardless of efficiency. Legal teams should read the Tenth Circuit opinion before relying on summaries of it.
Hourly Billing Still Means Charging for Time Actually Spent
When a lawyer bills by the hour, the invoice ordinarily should reflect the time actually spent performing compensable work. If an AI tool produces a draft in minutes, the lawyer generally should not bill for the hours the task might have taken without the tool.
Compensable time may still include preparing appropriate instructions, reviewing source material, checking the output, correcting errors, applying legal judgment, communicating with the client, and integrating the work into the matter. These are not artificial steps added to justify a fee. They are part of delivering reliable legal work.
The ABA's Formal Opinion 512 explains that lawyers using generative AI must consider duties involving competence, confidentiality, communication, supervision, candor, and reasonable fees. Its billing discussion emphasizes actual time and reasonable expenses.
AI Efficiency Does Not Eliminate the Value of Legal Judgment
An AI system may accelerate first-pass work without resolving the legal issue. A lawyer may still need to select the governing law, determine which facts matter, assess credibility, identify missing evidence, compare authorities, negotiate with another party, and accept professional responsibility for the final result.
Clients are not simply buying words. They are paying for judgment, risk assessment, strategy, communication, and accountable representation. The billing model should reflect that value honestly.
For hourly matters, efficiency normally reduces the time component. For flat-fee, subscription, capped-fee, or value-based arrangements, the price may not move in direct proportion to the minutes saved, but the total fee must still be reasonable under the applicable rules and circumstances.
Can a Firm Charge Clients for the AI Tool?
The answer depends on the engagement terms, the nature of the tool, the jurisdiction, and how the expense is characterized.
A general productivity system may be treated as firm overhead, much like common office software. A specialized service purchased for a particular matter may be handled differently. Before passing through any charge, the firm should determine whether the cost is permitted, reasonable, accurately described, and disclosed in advance when required.
A vague line item such as "AI fee" creates unnecessary questions. A clearer invoice explains the legal service performed and, when appropriate, identifies an agreed technology expense without suggesting that the software independently delivered legal advice.
When Should a Lawyer Tell the Client About AI Use?
Not every invisible software feature requires a separate client conversation. Material use may require disclosure when it affects how the representation is performed, involves client confidential information, changes an agreed workflow, creates a material risk, or is specifically addressed by the client or engagement agreement.
Clients may also ask whether their information is entered into a third-party system, retained by the provider, used to train a model, accessed across matters, or processed outside an approved environment. The firm should be able to answer those questions before using the tool.
Transparency should be useful rather than theatrical. The goal is to help the client understand relevant risks, costs, and choices.
Build Billing Records That Can Be Explained Later
An invoice should identify the work performed without revealing privileged strategy. Internal records should provide enough detail to reconstruct the workflow if the bill is questioned.
Useful records may include:
• The task assigned to the lawyer or legal professional.
• The sources or documents reviewed.
• The AI-assisted step and the approved tool used.
• The human verification and revisions completed.
• The actual time spent on each material stage.
• The person responsible for final approval.
These records help distinguish genuine legal work from an unsupported charge for automated output.
Avoid Billing for Learning That Benefits the Firm Generally
Training a lawyer to use a tool for ordinary firm operations is usually different from performing work for a particular client. Formal Opinion 512 cautions that lawyers generally may not charge a client for time spent learning a generative AI tool that they expect to use regularly.
An unusual client request may justify different treatment if the client specifically asks the firm to adopt a particular system and agrees to the arrangement. The basis should be discussed and documented rather than assumed.
Do Not Let AI Create Double Billing
Legal teams should watch for duplicate time entries. Examples include billing the full historical estimate for a task plus the actual review time, charging separately for automated and human work that occurred simultaneously, or entering time for multiple professionals who performed the same verification without a matter-specific reason.
Supervisors should review billing narratives alongside the actual workflow. AI can make work faster, but it can also make vague time entries harder to evaluate.
How Alloomi Supports a More Traceable Workflow
Alloomi AI helps legal professionals analyze documents while keeping the source material and review process connected. That does not determine what a firm may charge. It can, however, make it easier to identify what the system reviewed, what issues it surfaced, and where a lawyer applied judgment.
For a broader verification framework, see How to Review and Verify AI-Generated Legal Work. A traceable workflow supports both quality control and more accurate descriptions of the work performed.
Conclusion
Law firms may use AI in billable legal work, but the technology does not replace ordinary rules governing reasonable fees, actual time, client communication, expenses, confidentiality, and supervision.
The recent Tenth Circuit decision is best understood as an evidence ruling: AI use alone did not prove that the recorded hours were excessive. Firms should respond by maintaining clear engagement terms, accurate time records, transparent expense practices, and documented human review.
Frequently Asked Questions
1. Can a lawyer bill the time that AI saved?
Under hourly billing, the lawyer generally should charge for time actually spent, not hypothetical time the task would have required without AI. Other fee arrangements remain subject to reasonableness and the engagement terms.
2. Must every invoice disclose that AI was used?
Requirements depend on the jurisdiction, client agreement, materiality of the use, confidentiality risks, and applicable professional rules. Lawyers should provide meaningful disclosure when required or when the use is important to the client's decision.
3. Can a firm pass the cost of a legal AI tool to a client?
Possibly, but the charge must be permitted, reasonable, accurately described, and disclosed or agreed to when required. Routine firm technology may be treated differently from a matter-specific expense.
