The billable hour is coming to an end, thanks to AI and analytics

Faced with spending cuts by clients, stiffer competition from upstart legal services providers, and the rise of automation and artificial intelligence (AI), law firms' traditional model of the billable hour may have had its time in the sun. "Law firms are looking for different ways to charge for their services, especially in the corporate market where clients are just not accepting the old way of billing," says Dani McCormick, director of solutions at Lexis Nexis. The billable hour has long been the bedrock of how the legal profession works out how much to charge clients for their services. Fee earners log the time they spend on client work each day, usually in six-minute increments, and this helps them to provide clients with accurate bills and keep track of annual billing targets. While this model was effective in the past, critics say its rigid structure is incompatible with the current market, where clients are more price conscious, and see more value in project-based pay and success fees.