AI and Legal Fees: Billing Time Saved Under Rule 1.5

01 / PRACTICE NOTES

Hourly billing follows actual time, including prompting and review.

Opinion 512 applies ABA Formal Opinion 93-379 to generative AI: a lawyer who has agreed to bill by the hour does not fulfil the ethical duty by billing for more time than was actually expended. The opinion gives an example. If a lawyer uses a tool to draft a pleading and spends fifteen minutes inputting the relevant information, the lawyer may charge for those fifteen minutes as well as for the time spent reviewing the draft for accuracy and completeness. Efficiency belongs to the client in an hourly arrangement, because the goal is solely to compensate the lawyer fully for time reasonably expended.

The state authorities say the same thing in their own words. North Carolina’s 2024 Formal Ethics Opinion 1 addresses a lawyer who once spent three hours on standard estate-planning documents and now spends one with an AI tool, and it concludes that the lawyer may bill the one hour actually worked, not the time-value the documents would once have represented. Texas Opinion 705 states that a lawyer may charge for the time spent using the tool, refining its output and checking the work, and may not charge hourly fees for the time “saved.” The D.C. Bar’s Opinion 388 restates that an hourly lawyer is never justified in charging for hours not actually expended, and the Florida Bar’s Opinion 24-1 states that increased efficiency must not result in falsely inflated claims of time.

02 / PRACTICE NOTES

Flat, contingent and value-based fees let the efficiency show up in the price.

The Rule 1.5(a) factors apply to flat and contingent fees: the time and labor required, the novelty and difficulty of the questions, the skill required, the fee customarily charged in the locality, the amount involved and results obtained, the time constraints set by the client or the circumstances, the nature and length of the relationship, the experience and ability of the lawyers and whether the fee is fixed or contingent. Opinion 512 applies them to AI: if a tool lets a lawyer finish tasks much more quickly, it may be unreasonable to charge the same flat fee as when the lawyer worked without it, because a fee for which little or no work was performed is an unreasonable fee.

Flat fees remain available and often fit AI-assisted work well. North Carolina advises that a lawyer may bill a flat fee for drafting documents even when AI assists, provided the fee is not clearly excessive and the client consents to the billing structure. California’s 2026 guidance encourages lawyers to consider alternative structures such as flat fees for predictable assignments and to build the time savings from AI use into their competitive rates, and it asks that fee agreements communicate how fees and costs are calculated and the extent to which generative AI factors into the rates.

03 / PRACTICE NOTES

Subscriptions are overhead; per-use charges are expenses at actual cost.

Opinion 512 sorts tool costs by what the tool does. A cost that functions like equipping and maintaining a legal practice is overhead and is not charged to the client absent a contrary disclosure in advance; the opinion’s example is a generative AI feature embedded in word-processing software to check grammar. A third-party generative AI service used on a per-use basis to review thousands of voluminous contracts for a particular client would ordinarily support billing the actual out-of-pocket expense. Absent contrary disclosure, the lawyer should not add a surcharge to actual cost and should pass along discounts the lawyer receives. For an in-house tool, absent agreement the firm may charge no more than the direct cost plus a reasonable allocation of directly associated expenses, and it must ensure the charge does not duplicate charges to this or other clients.

California’s 2026 guidance reaches the same classification. Subscription fees for generative AI tools that provide general office functionality, such as drafting assistance, research capabilities or document review, typically constitute overhead and are absorbed in the lawyer’s fee. Costs specifically incurred for a client’s matter, such as per-use fees or custom implementations, may be charged if the fee agreement discloses that AI costs may be billed separately, the charge reasonably reflects actual cost and no markup or profit element is added without the client’s informed written consent. Texas treats per-use charges the same way: the lawyer generally cannot recover more than the expense actually incurred and paid to the provider.

Apply that framework to your own subscription. A fixed monthly plan used across the practice resembles the overhead category those authorities describe. RuleX plans run without usage credits, and U.S. plans are priced per user per month in U.S. dollars: Standard is $39.90 per month, with Student and Ultra plans available. Classify the subscription once for the firm and record the decision.

04 / PRACTICE NOTES

Time spent learning a tool is the lawyer’s own, with one narrow exception.

Opinion 512 connects Rule 1.5 to Rule 1.1. A lawyer may not charge a client for time necessitated by the lawyer’s own inexperience, and therefore may not charge a client to learn how to use a generative AI tool the lawyer will regularly use for clients, because lawyers must maintain competence in the tools they use. The exception is a client who explicitly requests that a specific tool be used when the lawyer is not knowledgeable in using it. In that case it may be appropriate to bill the client for the time to gain the knowledge, once the lawyer and client agree on the new billing terms and, preferably, memorialize them.

The calibration test described in the verification-record guide is a good example of time that belongs to the firm’s competence budget. Run it on a closed matter or a training sample so no client is billed for it.

05 / PRACTICE NOTES

Time entries that survive a fee review.

Write entries that describe the work performed and the review, at the time actually spent. The examples below are illustrative formats. They keep prompting and review visible, and they let a client or a fee arbitrator see that the hours reflect real attention to the matter.

“0.3 — Prepared instructions and entered lease and termination notice for research workspace.” “0.8 — Reviewed AI-assisted draft memorandum; opened and confirmed 14 authorities at source; revised analysis of notice defect.” “0.4 — Final review of filing and court-rules check.” Entries like these respect the rule that billing be accurate and honest, and they make the AI-assisted workflow transparent without requiring a separate line for the tool.

06 / PRACTICE NOTES

Write the AI billing basis into the engagement agreement.

Rule 1.5(b) requires a lawyer to communicate the basis on which fees and expenses will be charged, preferably in writing, before or within a reasonable time after commencing the representation. Opinion 512 applies that to AI: before charging a client for the use of generative AI tools or services, explain the basis for the charge, preferably in writing. It also lists fee relevance as a situation where Rule 1.4 requires the lawyer to consult the client on the use of the tool.

A short paragraph is enough, and it can sit beside the paragraph on AI practices and confidentiality. Start the 7-day free trial, add a real matter and open the sources from the answer.

1. State whether you bill hourly, flat or on contingency and that AI-assisted work follows the same basis.
2. Explain that hourly entries reflect time actually spent, including prompting and review.
3. State whether any AI tool cost will be billed as an expense and on what terms, with no markup absent informed written consent.
4. Describe how a flat fee reflects the efficiency of your workflow.
5. Record any client instruction to use, or avoid, a specific tool.
6. Review the paragraph when your tools or your state’s guidance change.