October 21, 2026 · 22 min read · Fees and billing

AI and the billable hour: who keeps the time that AI saves?

Legal FeesBillable HourFee AgreementsProfessional Rules

At the start of September, according to the Financial Times, Goldman Sachs, Morgan Stanley and Citigroup began pressing their outside law firms to pass on part of what artificial intelligence now saves them. A Citi survey of 57 firms, reported the same week, found that about half say AI has already affected their billable-hour model and three-quarters expect it to by 2028, even though demand for lawyers' time grew by 4.2% in the first half of the year, against a usual rate of around 1.5% (1). On 20 October a survey of 300 in-house lawyers in the United States, commissioned by a legal technology vendor, put a figure on the expectation: 60% expect lower fees or fewer billed hours when their firms use AI, and 62% expect firms to disclose that use (2). European courts are reaching the same question from another direction. In March 2026 a Dutch court refused to price a software-generated valuation report by the hour at all, and set a flat EUR 15 instead (3).

Behind all of this sits a question the profession has mostly avoided: who keeps the time that AI saves? The answer does not depend on what a firm thinks of the billable hour. It follows from fee rules that already exist. Those rules were not written with AI in mind, but they answer most of the practical questions, and they differ between the Netherlands, Germany and France far more than the international debate suggests.

The short answer: the billable hour is not prohibited, and nothing so far shows it disappearing. Wherever a lawyer bills by the hour, though, only time actually worked may be charged. Time spent checking what an AI tool produced counts; time the tool saved does not. A licence for software used across the practice is overhead unless the client agreed otherwise in advance. Clients who want a share of the savings can get it through fixed, capped or phased fees, but in the Netherlands, Germany and France a fee that depends only on the result is still largely prohibited. For consumer clients there is a further constraint: under a 2023 ruling of the Court of Justice of the EU, an hourly-rate clause needs an estimate of hours or regular reports of hours worked, and Dutch courts have since cut, and sometimes refused, fees where that was missing.

What AI changes in a fee

AI does not shorten all legal work evenly. It shortens the parts that were priced by the hour almost by default: the first draft of a memo or a submission, the summary of a bundle of documents, the comparison of a contract against a template, the first sweep through case law on a familiar question. Those are also the tasks traditionally given to junior lawyers, which is why the pressure lands first on the hours that carry much of a firm's margin.

Other parts of the work do not shrink, and some grow. Every authority in an AI-assisted draft still has to be opened and read; every fact taken from a document has to be checked against the document. Courts and disciplinary bodies have made clear that this step cannot be skipped. In July 2026 a Dutch disciplinary tribunal reprimanded an advocaat who had copied case law generated by an AI tool into a statement of defence without checking the references or even reading the decisions (4). In August the Amsterdam district court added half a point to a costs order because a submission had quoted a well-known judgment in words that appear neither in that judgment nor anywhere else in published case law (5); our guide to AI-generated fake cases covers that risk in detail. Legal judgment, strategy and responsibility for the advice also stay exactly where they were.

The pricing consequence is simple to state. Under an hourly arrangement, the time AI saves goes to the client automatically, whether or not the firm intends it. Under a fixed fee agreed in advance, the saving stays with the firm. That is why clients now ask what the AI is doing on their matters, and why firms are looking again at fixed and phased fees. Both can be done properly. Both can also be done in breach of the rules.

The common rule: bill the time you actually worked

The most explicit statement so far comes from the United States. In July 2024 the American Bar Association's ethics committee wrote that AI tools may give lawyers a faster way to work, "but lawyers who bill clients an hourly rate for time spent on a matter must bill for their actual time" (6). Its example is precise. A lawyer who spends fifteen minutes giving a tool the material for a pleading may charge those fifteen minutes, plus the time spent reviewing the draft for accuracy and completeness, and nothing for the hours the draft would once have taken. A lawyer who becomes particularly efficient still may not charge for more hours than were actually spent. Charging the same flat fee with and without the tool may be unreasonable where the tool makes the work much faster. And time spent learning a tool the lawyer will use for other clients may not be charged at all, unless the client specifically asked for that tool.

No European bar has adopted a binding fee rule written for AI. The Dutch bar's recommendations on AI say nothing about fees (7), and neither does the German Federal Bar's AI guidance of December 2024, which recommends a contractual arrangement with clients on AI use instead (8). The French Conseil national des barreaux comes closest. Its practical guide on AI and professional ethics, adopted in March 2026, says the use of AI can move fees in either direction: down because of the time saved, up because of what the tools cost. Fees must be set in a balanced and transparent way that takes account of the time saved, the cost of the technology and the lawyer's responsibility for AI-generated content, and the written fee agreement is where that is settled (9). Beyond that, the European answers come from general fee law, and they lead to the same place, because each system ties an hourly fee to work that was actually done and gives the client, a court or a disciplinary body the means to test that link.

Netherlands: a reasonable fee, an estimate in advance, no success fee

Rule 17 of the Dutch Gedragsregels requires an advocaat to charge a fee that is reasonable in all the circumstances, to make clear agreements on the fee, the passing on of costs and the billing method when accepting the instruction, to warn the client as soon as the bill looks set to be substantially higher than the estimate given, and to bill periodically and in proper detail, stating rate and time spent "of een andere overeengekomen grondslag" (10). The commentary to the rule says an advocaat will usually have to estimate the expected time and the total cost, and may not omit an estimate that could reasonably be given in order to avoid the duty to warn. The words "another agreed basis" matter: the rules contemplate fixed and phased fees, not only hours.

Two points follow for AI. First, an hourly bill must reflect time actually spent. The specification requirement exists so that the client can test it, and the Hof van Discipline reviews whether the total billed is excessive in relation to the work done (11). Second, the estimate given at the start should reflect how the firm actually works today. An estimate built on a pre-AI workflow overstates the hours, and an inflated estimate quietly disables the one safeguard Rule 17 builds in: the duty to warn only applies once the bill threatens to exceed it.

Success fees remain largely closed. Article 7.7 of the Verordening op de advocatuur prohibits agreeing that a fee will be charged only if a particular result is achieved, or that the fee will be a proportion of the value of the result (12). The exceptions are narrow: a customary collection tariff and a separate regime for personal-injury cases. Disciplinary case law does allow a low hourly rate if the case is lost and a higher one if it is won, provided the low rate covers costs and a modest salary, and the commentary to Rule 17 accepts linking the uplift to the value of the result on that condition (10). That is the Dutch room for "outcome-based" pricing.

Germany: statutory fees, hourly agreements and a floor in court

Germany starts from a different place. Statutory fees under the Rechtsanwaltsvergütungsgesetz (RVG) depend, for most matters, on the value at stake and the procedural steps taken, not on time. A fee below the statutory fee may be agreed only for out-of-court work and certain debt-collection proceedings (13); otherwise section 49b(1) of the Federal Lawyers' Act (BRAO) prohibits undercutting the RVG (14). In court work, therefore, AI savings cannot be passed on below the statutory fee at all. Matthias Kilian, director of the Soldan Institute, has argued that this lump-sum logic makes statutory fees largely robust against AI and that the efficient lawyer should keep the fruits of efficiency, while expecting insurers and other cost bearers to push for AI savings to show up in prices (15).

Hourly fees require a fee agreement in text form, labelled as such and set apart from other terms, with a notice that the other side will normally reimburse no more than the statutory fee (13). The Federal Court of Justice (BGH) has built a strict line around them. A lawyer on an hourly fee may bill only the working time actually spent; a standard clause charging a quarter of the hourly rate for every 15 minutes started is void against consumers (16). The lawyer bears the burden of proving the hours, and generic entries such as file work, research or telephone calls are not enough: in a fee dispute the lawyer must show concretely which documents were reviewed, which brief was prepared and which legal question was researched (17). In the same decision the BGH read the agreed rate as paying for the lawyers' personal work, with the support of junior legal staff absorbed into it. No court has yet applied that reasoning to AI, but it is the obvious analogy: the tool's output is part of what the lawyer's rate pays for, not a second timekeeper.

Success fees are prohibited by section 49b(2) BRAO except where the RVG allows them, which since 2021 means three cases: claims of up to EUR 2,000, debt collection, and matters in which the client would otherwise, on a sensible view, be deterred from pursuing their rights (13).

France: the fee agreement, the CNB's guidance and the fee judge

In France a written fee agreement, the convention d'honoraires, is compulsory outside urgency, force majeure and full legal aid. It must state the amount or method of calculation of the fees for the foreseeable work and the costs envisaged. Fees reflect, according to custom, the client's means, the difficulty of the matter, the costs incurred by the avocat, the avocat's reputation and the work done. A fee fixed only by reference to the judicial result is prohibited; a complementary fee depending on the result, on top of a fee for the work done, is lawful (18). The code de déontologie, in force since 2023, also requires the avocat to keep the client regularly informed of how fees are developing, and it expressly allows fixed and periodic fees (19).

Time is one element of the fee, not the whole of it. The profession's national rules list time spent first, but alongside research work, the nature and difficulty of the matter, the stakes, the firm's costs, the avocat's experience and specialisation, the result obtained and the service rendered (20). That is the textual basis for the CNB's view that AI can push fees down or up. In April 2026 the CNB also revised its model fee agreements. They now offer an optional clause on AI use, which describes the tools as technical assistance under the avocat's control and says nothing about price, and the hourly model builds in invoices at an agreed interval, each accompanied by a statement of the work done and the time spent (21).

Disputes go to the bâtonnier and then to the premier président of the court of appeal, and the Cour de cassation has kept that judge on a short lead in both directions. Without a fee agreement, the judge may not simply multiply the hours by an average local hourly rate, because that is not one of the statutory criteria (22). With or without one, the judge may reduce the fee, unless the client accepted both its principle and its amount after the service was rendered (23). For AI-assisted work, that leaves the avocat's best protection where the CNB puts it: a fee agreement that says in advance how the work will be priced.

Consumer clients: the hourly clause must say what the hours will add up to

For clients who are consumers, EU law adds a layer beneath every national rule. In D.V. (C-395/21, 12 January 2023), a Lithuanian lawyer had agreed five contracts with a private client at EUR 100 an hour and sued for EUR 9,900 (24). The Court of Justice held that a clause fixing a lawyer's fee by the hour forms part of the main subject matter of the contract, so it escapes the unfairness test only if it is plain and intelligible. A bare hourly rate is not. Before signing, the consumer must receive information that allows a prudent decision in full knowledge of the economic consequences, including particulars from which the approximate total cost can be assessed, such as "an estimate of the expected number or minimum number of hours needed to provide a certain service, or a commitment to send, at reasonable intervals, bills or periodic reports indicating the number of hours worked". Lack of transparency does not by itself make the clause unfair. But if a court finds it unfair and the contract cannot survive without it, EU law does not prevent the lawyer from receiving nothing, and it does not allow the court to replace the clause with its own view of a reasonable fee.

The three jurisdictions have read the judgment very differently. Dutch courts have applied it most often and least uniformly. In 2023 and early 2024, Amsterdam judges rejected advocaten's fee claims in full where the engagement letter gave only an hourly rate, in one case ordering the advocaat to pay the client's legal costs as well (25). The courts of appeal have since moderated that line. In November 2024 the Amsterdam court of appeal held that a promise to invoice monthly does not make an hourly clause transparent, because the advocaat should have given an order of magnitude ("EUR 5,000, EUR 10,000 or EUR 50,000"), but found the clause not unfair and reduced the fee by 25% for breach of the pre-contractual information duties (26); in July 2025 it applied a 40% reduction (27). The 's-Hertogenbosch court of appeal went the other way in March 2025: an advance invoice had suggested the total would be roughly that amount, so the clause was unfair, the agreement void, and the client recovered the fees already paid (28). In July 2026 the Hague court of appeal awarded an advocaat the full fee, holding that the missing estimate made the clause non-transparent but not unfair (29). The Hoge Raad has not settled the question for advocaten, but the Hof van Discipline held in August 2026 that Rule 17 and the Court of Justice ruling together require an advocaat to estimate the expected time and total cost in advance (11).

The German and French supreme courts have taken a narrower view. In September 2024 the BGH held that a standard hourly-fee clause is not invalid against a consumer merely because the lawyer gave no information on the likely total and did not promise interim bills, and that the Court of Justice ruling gave it no reason to depart from its case law: the lawyer's duty to itemise and prove every hour already compensates for the client's lack of insight (30). In March 2026 the Cour de cassation, applying the same ruling to a success-fee clause, quashed an order that had struck the clause out for lack of clarity alone, because the judge had not identified a significant imbalance to the consumer's detriment (31).

AI sharpens all of this. The two safeguards the Court of Justice names, an estimate of hours and regular reports of hours worked, are exactly what a client needs to see whether AI savings are reaching the bill. A firm that has changed how it works but still quotes the hours of its old workflow is giving an estimate it knows to be wrong in a predictable direction.

Fixed fees, caps and success fees: what "outcome-based" can mean in Europe

When in-house lawyers say they expect "outcome-based pricing", they usually mean paying for a defined deliverable rather than the hours behind it. In Europe that is lawful and often sensible. What it cannot mean, outside narrow exceptions, is a fee that exists only if the case is won, or a share of what the client recovers. All three jurisdictions keep that line, each in its own way, and AI does not move it. That still leaves a wide range of honest ways to share AI savings:

A fixed fee per defined task or phase. A research memo on a stated question, a first-instance statement of claim, a due-diligence report on a defined data room. The scope must be precise enough that both sides know what is and is not included.
A capped hourly budget. The client pays actual time up to an agreed ceiling, which keeps the hourly rules intact and shares the risk of overruns.
A lower and a higher rate. Lawful in the Netherlands on the conditions described above, and in France in the form of a complementary success fee on top of a fee for the work done.
A periodic or subscription fee. A monthly amount for a defined volume of recurring work, which French rules now expressly allow, reviewed periodically against actual effort. Exit terms need care: in December 2025 the Cour de cassation held that a clause making a consumer pay the whole unbilled balance of a multi-year fixed fee on early termination was unfair (32).

One caution from the American opinion translates directly: a fixed fee set when the work took twenty hours is not automatically reasonable when it now takes four (6). In Europe the reasonableness of a fixed fee is usually tested against what was agreed, but a price that has quietly lost its link to the work is still the kind of fee a court can reduce, as section 3a(3) RVG and the French fee judge's powers both show (13) (23).

Can the AI tool itself be charged to the client?

Usually not as a separate item, unless agreed in advance. The American opinion distinguishes between tools that function like equipping a practice, whose cost is overhead, and a third-party service bought for one client's matter on a per-use basis, whose actual cost may be passed on as an expense, without a mark-up and with any discount passed through (6). German fee law states the overhead rule outright: the statutory fees also pay for the firm's general business costs, and the list of reimbursable expenses contains nothing for software or AI licences (33). Under an hourly agreement, the BGH struck down in 2024 an expenses surcharge of 5% of the fees, because it raised the hourly rate without any showing that each hour actually caused such costs (30). A flat "technology surcharge" calculated as a percentage of time is exposed to exactly the same objection.

The Dutch and French rules reach a similar result through the duty to agree costs in advance: Rule 17 requires clear agreements on passing on costs (10), a French fee agreement must list the costs envisaged (18), and the CNB's fixed-fee model treats the firm's running costs as covered by the fee (21). A firm that wants to charge a per-matter technology cost should say so in the engagement letter, explain what it covers, and be able to show that it reflects a real, matter-specific expense.

Checking AI output is work; learning the tool is not

The time a lawyer spends verifying an AI-assisted draft is real professional work and can be charged like any other. It is also the step clients most need to see, because it separates a usable draft from a liability. A bill that shows no time for checking a draft the client knows was AI-assisted invites the wrong question.

Two kinds of time are harder to justify. The first is learning: the American opinion treats time spent learning a tool the lawyer will use for other clients as the lawyer's own cost of staying competent (6), and the same logic applies in every system that ties fees to the client's matter. The second is repairing the tool's mistakes. Time spent discovering that a cited judgment does not exist is not time the client asked to pay for; in the Amsterdam case above, it was time the court charged to the party responsible (5).

What the losing side pays

Fee-shifting rules decide whether AI efficiency matters in a costs order, and here the three systems differ sharply from the American lodestar model, in which a court multiplies reasonable hours by a reasonable rate.

In the Netherlands, ordinary costs orders follow the liquidatietarief, a points system based on procedural steps rather than hours, so the time a firm spent is largely irrelevant. Intellectual-property cases are the exception: article 1019h of the Code of Civil Procedure awards the reasonable and proportionate costs actually incurred (34), so specified hours are scrutinised, and AI-assisted hours will be too. The March 2026 Noord-Holland judgment shows how a court may react when work is visibly machine-made. The claimant sought two hours at an hourly rate for a property valuation report produced by a software model; the court found it implausible that two hours of human expertise had gone into it, held that neither a unit of time nor an hourly rate fitted the way the report had been produced, and set the compensation at EUR 15 per report, benchmarked on what municipalities spend per property (3). The case concerned tax valuations under the administrative-law costs rules, not an advocaat's fee, and it may be appealed. Its reasoning is not confined to its facts.

In Germany, the winning party recovers the statutory fees, whatever it actually paid its lawyer: section 91(2) of the Code of Civil Procedure makes the statutory fees and expenses of the winning party's lawyer recoverable in all proceedings (35). AI efficiency therefore does not reduce what the loser pays. In France, the court awards a sum under article 700 of the Code of Civil Procedure for costs not included in the dépens, taking account of equity or the losing party's economic situation. It is a discretionary figure, not an hours calculation.

What to put in the engagement letter

Most fee disputes about AI will be decided on what the engagement letter said before the work started. Six points cover what the rules and the case law above require:

How AI is used on the matter. In general terms: which kinds of task, under whose supervision, and that a lawyer reviews everything that leaves the firm. The Dutch bar asks advocaten to obtain the client's consent to AI use in the file (7), and the CNB's model clause offers French avocats a ready wording (21). Our guide on client consent before using AI covers the rest.
The fee basis. Hourly, fixed per phase, capped, or a combination, stated in a way the client can apply to a real bill.
An estimate that reflects how the firm now works. For consumers this is close to a legal requirement; business clients are asking for it anyway. An order of magnitude, per phase where needed, with a commitment to update it.
Reporting. Periodic bills or reports showing the hours worked, as the Court of Justice suggests, and a warning before the estimate is exceeded, as Rule 17 requires in the Netherlands.
Technology costs. Either a statement that tools are included in the fee, or a precise description of any matter-specific charge passed on at cost.
How savings are shared. If the client is to benefit from efficiency beyond what hourly billing already gives, say how: a lower fixed fee, a cap, or a review point after the first phase.

Time records and the description on the bill

Under an hourly agreement the time record is the evidence. Record the time actually spent, including time spent instructing the tool and checking its output, and describe the work in terms the client can test. "Review and correction of first draft of statement of defence; eleven cited authorities checked against the sources" tells a client far more than "drafting", and it is the level of detail the BGH requires (17). Do not record the time a task would have taken without the tool, and do not add a notional value uplift to an hourly entry. If the firm believes the work is worth more than the hours, the place to say so is the fee agreement before the work starts, not the bill afterwards.

A pricing policy in eight decisions

Hourly matters bill actual time only, including review of AI output and excluding time spent learning tools.
Every estimate is rebuilt on the firm's current, AI-assisted way of working.
Consumer engagements always carry a written estimate of hours or total cost, plus periodic reporting.
Fixed fees are tied to a written scope and reviewed when a phase turns out much shorter than expected.
No result-only fees outside the national exceptions; success elements only in the forms each system allows.
Tool licences are overhead unless a matter-specific charge is agreed in advance and passed on at cost, never as a percentage of fees.
Time narratives show verification as a distinct step and never present AI output as unaided work.
Someone owns pricing. A partner or committee reviews AI-heavy matters for whether the fee still reflects the work and the value delivered.

How this fits the way LexVera supports legal work

Every model above depends on something the client cannot see directly: whether the work behind the bill was actually checked. A fixed fee is only safe to offer if the firm can predict how long verification will take, and an hourly bill is only convincing if the time recorded for review corresponds to something real. LexVera is built around that step. Research and document analysis in LexVera keep each proposition tied to the authority or document passage it rests on, so the reviewing lawyer opens the source instead of searching for it, and a supervising partner can see what was checked. That makes review shorter and, more importantly for pricing, more predictable.

The firm decides how it prices its work; LexVera does not set or suggest fees. It supports the preparation, and a qualified lawyer decides what becomes advice, a submission or a bill, which is the standard set out in our editorial policy. Matter material stays inside the workspace the firm controls and is not used to train models.

Frequently asked questions

Can a lawyer bill the hours that AI saved?

Not under an hourly agreement. The American Bar Association, the German Federal Court of Justice and the Dutch rules of conduct all tie an hourly fee to time actually worked. A firm that wants to be paid for value rather than time has to agree a different fee basis in advance, such as a fixed fee per phase.

Is time spent checking AI output billable?

Yes. Reviewing an AI-assisted draft, opening the cited authorities and checking facts against the file is real professional work and can be charged like any other. Time spent learning a tool the lawyer uses for every client is a different matter and is generally treated as the lawyer's own cost.

Can a law firm charge clients for its AI subscription?

Not as a separate item unless the client agreed in advance. A tool used across the practice is overhead, which German fee law states expressly. A matter-specific, usage-based cost can be passed on at cost if the engagement letter says so. A flat percentage surcharge on fees is risky: the German Federal Court of Justice struck down a 5% expenses surcharge in 2024.

Can AI savings be shared through a success fee?

Only within narrow limits. The Netherlands, Germany and France all prohibit a fee that depends solely on the result, with limited exceptions. What is allowed is a fixed or capped fee, a lower and a higher rate depending on the outcome in the Netherlands, or a complementary success fee on top of a fee for the work done in France.

Must a lawyer give a consumer client an estimate of hours?

In practice, yes. The Court of Justice of the EU held in 2023 that a bare hourly rate in a consumer contract is not transparent without an estimate of hours or regular reports of hours worked. Dutch courts have cut or refused fees where it was missing. The German and French supreme courts require more than a lack of transparency before a fee clause falls.

Does AI change what the losing party pays in costs?

Mostly not in continental Europe. German courts award statutory fees regardless of time, French courts award a discretionary sum, and ordinary Dutch costs orders follow a points system. The exception is where actual costs are claimed, such as Dutch intellectual property cases, where claimed hours are scrutinised.

Sources and methodology

This guide reflects legislation, court and disciplinary decisions, bar guidance and published surveys available on 21 October 2026. Several of the decisions cited are first-instance rulings that may be or have been appealed, and surveys published by vendors are identified as such. Older German decisions cite the RVG under its pre-2021 numbering; the provisions are cited here as they stand today. This is general professional information, not advice on a specific fee agreement or dispute.