AI Is Squeezing the Billable Hour as Legal Profession Rethinks How Work Gets Done

Artificial intelligence is now used by nearly 90% of legal professionals in the United Kingdom and Ireland, and the technology is placing sustained pressure on the billable hour — the financial backbone of most law firms — according to Clio's U.K. & Ireland Legal Insights Report 2026.

Among firms that have adopted AI, almost 80% said they can handle more work without adding resources, while over 70% reported that AI cut costs by absorbing administrative work previously handled by support staff.

The economics of traditional legal billing are being tested as a result. "You can't charge 16 hours for something that takes 16 seconds," Nick Rowles-Davies, founder and CEO of London- and Dubai-based legal finance fund Lexolent, told CNBC.

About one in five firms that have widely adopted AI report difficulty meeting billable-hour targets, the Clio report found. 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, according to a separate Deloitte survey.

Some of the U.K.'s largest firms are already deploying AI in substantive practice areas. A&O Shearman has partnered with legal AI company Harvey to build agents capable of reviewing loan agreements and analyzing regulatory filings — tasks that previously took several hours and can now be completed in minutes, the firm said. Slaughter and May has rolled out Harvey across all its practice areas in 2026, including for regulatory research and document analysis.

Rowles-Davies noted that routine document work faces the most exposure. "If you've got standard documents and you're just putting in detail, then clearly that's an automatic process," he said. Complex legal work, however, still demands human judgment — particularly when interpreting AI output and determining strategy.

Liability is also a live concern. Rowles-Davies pointed to cases in which lawyers were sanctioned for submitting court briefs that cited nonexistent cases generated by AI.

Mansoor Soomro, who leads the Future of Work Research Unit at Teesside University in Middlesbrough, told CNBC that the billable hour is not disappearing overnight, but is becoming harder to justify as automation compresses task times.

The disruption extends to how junior lawyers develop their skills. Reviewing large volumes of documents, drafting contracts, and researching case law have traditionally been the entry points through which new lawyers build legal reasoning. As AI absorbs those tasks, that pipeline is narrowing.

"A faster route to a draft does not automatically mean a faster route to competence," said Jorge Bestard, London-based head of EMEA at Harvey.

A&O Shearman said it is adapting by placing greater emphasis on "curiosity and entrepreneurship" when evaluating talent, according to Francesca Bennetts, the firm's London-based head of legal talent. The firm is also developing career paths in legal engineering, product management, and AI delivery — roles that "barely existed a few years ago," Bennetts said.

Soomro expects legal judgment to become "disproportionately valuable," with lawyers spending more time interrogating and contextualizing AI output. "The future may therefore not belong to the lawyer who knows the most about one narrow area, but to the lawyer who knows how to connect multiple areas to solve a complex client problem," he said.

The question of whether AI ultimately benefits legal professionals depends heavily on how firms deploy the time they recover. Clio's report found that 51% of legal professionals currently work evenings, while only 32% want to; 22% work weekends, compared with 11% who would choose to do so.

Joshua Lenon, Clio's New York-based lawyer-in-residence, said feedback from practitioners is cautiously positive. "Lawyers [are] telling us that their day is getting better," Lenon said. "People are really looking at these tools and saying, 'This is making work better.'"

As billing models evolve and junior training pathways shift, the legal industry faces a structural reconfiguration that extends well beyond workflow efficiency — touching the profession's economic model, its talent pipeline, and the long-term definition of legal expertise itself.