Addressing AI in Your Billing Guidelines
This is the fourth in a series of posts based on our whitepaper “Legal Billing Guidelines in the Age of AI.” In this post, we key .
Artificial Intelligence, particularly generative AI, is rapidly changing the legal landscape. Law firms are adopting AI tools to boost efficiency in tasks like legal research, document drafting, and analysis. While this offers potential benefits like cost savings, it also introduces new considerations for in-house teams regarding oversight, quality, and confidentiality.
Your legal billing guidelines need to evolve to address the use of AI. Ignoring it isn't an option. Here are key areas your guidelines should cover:
Disclosure and Transparency: Require outside counsel to disclose when and which generative AI tools are used for substantive legal work on your matters. Knowing how work is being done is crucial. Transparency allows you to assess if appropriate tools are being used effectively.
Attorney Oversight and Responsibility: Emphasize that while AI can assist, qualified attorneys must review, verify, and supervise all AI-generated work product. Your guidelines should state clearly that the law firm retains full responsibility for the accuracy, ethical implications, and quality of the final work product. AI is a tool, not a replacement for legal judgment.
Confidentiality and Data Security: Counsel must ensure that their use of any AI tool complies with all confidentiality, data privacy, and security obligations. Your sensitive information must be protected, and attorney-client privilege preserved.
Billing for AI Tools: Clarify how costs associated with AI tools (e.g., subscription fees) should be handled, likely aligning with your general expense policies and potentially requiring pre-approval.
Furthermore, sophisticated legal spend management platforms are now using AI to help in-house teams enforce these very guidelines. AI can review invoices at scale, check for compliance against your rules (including AI usage policies), and identify billing patterns that manual reviews might miss.
Updating your billing guidelines to address AI proactively is important for managing risk, ensuring quality, and leveraging technology responsibly in your outside counsel relationships.
For a comprehensive guide on creating your billing guidelines as well as our sample billing guidelines template, see our Legal Billing Guidelines in the Age of AI.