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The end of the billable hour? AI impact on legal business models | Wolters Kluwer

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Specialized in clinical effectiveness, learning, research and safety.</p> <a href="/en/health" class="ow-nav-level-2-view-all-link"><span>Health Overview</span><span aria-hidden="true" class="wk-icon-arrow-right"></span></a> </div> </div> <div class="ow-primary-nav-items"> <div class="ow-primary-nav-item"> <div class="ow-primary-nav-content"> <h6 class="ow-nav-level-2-list-heading">Solutions</h6> <ul class="ow-nav-level-2-list "> <li class="ow-nav-level-2-list-item ow-nav-level-2-list-item-with-text"><a href="/en/solutions/uptodate" class="ow-nav-level-2-link">UpToDate</a><span class="ow-nav-level-2-text">Industry-leading clinical decision support</span></li> <li class="ow-nav-level-2-list-item ow-nav-level-2-list-item-with-text"><a href="/en/solutions/ovid" class="ow-nav-level-2-link">Ovid</a><span class="ow-nav-level-2-text">The world’s most trusted medical research platform</span></li> <li class="ow-nav-level-2-list-item ow-nav-level-2-list-item-with-text"><a href="/en/solutions/uptodate" class="ow-nav-level-2-link">UpToDate Lexidrug</a><span class="ow-nav-level-2-text">Evidence-based drug referential solutions</span></li> <li class="ow-nav-level-2-list-item ow-nav-level-2-list-item-with-text"><a href="/en/solutions/simplifi-plus-pharmacy-compliance" class="ow-nav-level-2-link">Simplifi+ Pharmacy Compliance</a><span class="ow-nav-level-2-text">An automated suite of compliance solutions to optimize your operations</span></li> </ul> <a href="/en/health/our-solutions" class="ow-nav-level-2-view-all-link"><span>View All Solutions</span><span aria-hidden="true" class="wk-icon-arrow-right"></span></a> </div> </div> <div class="ow-primary-nav-item"> <div class="ow-primary-nav-content"> <h6 class="ow-nav-level-2-list-heading">Roles</h6> <ul class="ow-nav-level-2-list "> <li class="ow-nav-level-2-list-item"><a href="/en/know/healthcare-roles/technology-leaders" class="ow-nav-level-2-link">Hospital technology leaders</a></li> <li class="ow-nav-level-2-list-item"><a href="/en/know/healthcare-roles/nurse-executives" class="ow-nav-level-2-link">Nursing leaders</a></li> <li class="ow-nav-level-2-list-item"><a href="/en/know/healthcare-roles/clinical-leaders" class="ow-nav-level-2-link">Clinical leaders</a></li> <li class="ow-nav-level-2-list-item"><a href="/en/know/healthcare-roles/pharmacy-leaders" class="ow-nav-level-2-link">Pharmacy leaders</a></li> <li class="ow-nav-level-2-list-item"><a href="/en/know/healthcare-roles/health-plan-executives" class="ow-nav-level-2-link">Health plan executives</a></li> <li class="ow-nav-level-2-list-item"><a href="/en/know/healthcare-roles/medical-librarians" class="ow-nav-level-2-link">Medical librarians</a></li> </ul> <a href="/en/know/healthcare-roles" class="ow-nav-level-2-view-all-link"><span>View All Roles</span><span aria-hidden="true" class="wk-icon-arrow-right"></span></a> </div> </div> <div class="ow-primary-nav-item"> <div class="ow-primary-nav-content"> <h6 class="ow-nav-level-2-list-heading">Expert Insights</h6> <ul class="ow-nav-level-2-list "> <li class="ow-nav-level-2-list-item"><a href="/en/expert-insights/bridging-the-gap-between-evidence-and-practice-in-healthcare" class="ow-nav-level-2-link">Bridging the gap between evidence and practice in healthcare</a></li> <li class="ow-nav-level-2-list-item"><a href="/en/expert-insights/payers-future-requires-building-sustainable-data-alignment-strategy" class="ow-nav-level-2-link">For payers, the future requires building a sustainable data alignment strategy</a></li> <li class="ow-nav-level-2-list-item"><a href="/en/expert-insights/preparing-physician-assistants-for-success-amidst-healthcare-staffing-challenges" class="ow-nav-level-2-link">Preparing physician assistants for success amidst healthcare staffing challenges</a></li> <li class="ow-nav-level-2-list-item"><a href="/en/expert-insights/why-broad-reach-works-in-targeted-physician-campaigns" class="ow-nav-level-2-link">Why broad reach works in targeted physician campaigns</a></li> </ul> <a href="/en/expert-insights/health" class="ow-nav-level-2-view-all-link"><span>View All Expert Insights</span><span aria-hidden="true" class="wk-icon-arrow-right"></span></a> </div> </div> </div> </div> </div> </div> </div> </div> </li> <li class="ow-nav-level-1-item"> <button type="button" class="wk-button wk-button-text ow-nav-level-1-trigger"><span class="ow-nav-level-1-trigger-text">Tax &amp; 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class="breadcrumb-navigation__item home"> <span class="breadcrumb-navigation__link">Redefining legal business - the end of the billable hour?</span> </li> </ol> </nav> </div> </div> </div> </div> </div> </div> </div> <div class="container-fluid"> <div > <div class="row"></div> </div> </div> </div></div></div> </div> </header> <!-- /#header --> <!-- #content --> <main> <div id="content" class="container"> <div class="row"> <div class="row"><div class="component article-header col-12"> <div class="component-content"> <div class="image field-image"><image width="3840" height="960" alt="Future Ready Lawyer 2024" src="https://assets.contenthub.wolterskluwer.com/api/public/content/2412552-future-ready-lawyer-2024-317903fc8d?v=91254bc8" stylelabs-content-id="2412552" stylelabs-content-type="Image" thumbnailsrc="https://contenthub.wolterskluwer.com/api/gateway/2412552/thumbnail" 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(max-width:991px)991px,(max-width:1199px)1199px,(max-width:1440px)1440px,1920px" format="" data-variantfieldname="Image" /></div><div class="container no-padding"><div class="col-lg-10 offset-lg-1 no-padding"><div class="eyebrow"><span class="interest-area field-name">Legal</span><span class="date field-editorial-publish-date">October 24, 2024</span><span class="updated-date-section"><span class="separatorLine">|</span><span>Updated</span><span class="field-editorial-revision-date">October 24, 2024</span></span></div><h1 class="title field-title">Redefining legal business - the end of the billable hour?</h1><div class="author-section"></div></div></div> </div> </div> <div class="row component column-splitter"> <div class="col-12 col-md-8 col-lg-1 sticky-wrapper"> <div class="row"> <div class="component social-share vertical col-12"> <div class="component-content"> <div class="share-sticky"><div class="share-wrapper"><div class="share-btn share-btn-linkedin" aria-label="Share on Linkedin"></div><div class="share-btn share-btn-twitter" aria-label=" Share on Twitter"></div><div class="share-btn share-btn-facebook" aria-label="Share on Facebook"></div><div class="share-btn share-btn-mail" aria-label="Share with Mail"></div><div class="share-btn share-btn-print" aria-label="Print"></div><div class="share-btn share-btn-link" aria-label="Copy Link"></div></div></div> </div> </div> </div> </div> <div class="col-12 col-md-8 col-lg-6"> <div class="row"> <div class="component row-splitter"> <div class="container-fluid"> <div > <div class="row"> <div class="component rich-text article-text"> <div class="component-content"> <p><span class="abstract">The traditional billable hour model, a cornerstone of law firm pricing strategy, could be challenged by the rise of AI-driven efficiencies. Wolters Kluwer’s <em>2024 Future Ready Lawyer Survey Report</em> shows the legal industry is seeing potential shifts in traditional business models – from the impact of GenAI to using external providers to support their work.</span></p> <p>According to the <em>2024 Future Ready Lawyer Survey</em> <em>Report</em>, one of the more widely debated topics is the effect of GenAI on the billable hour. No less than 67% of corporate legal departments and 55% of law firms expect AI-driven efficiencies to have an impact on the prevalence of the billable hour, while 20% even foresee a significant impact.</p> <h2>The impact of GenAI on legal business models</h2> <p> “It is inevitable that GenAI will reshape firms’ business models in fundamental ways,” says Robert Ambrogi, Publisher, LawSites blog/LawNext podcast. “With AI handling more of their professionals’ routine tasks and streamlining more of the complex ones, more law firms will shift from hourly billing to alternative models such as flat fees, subscription services, or value-based billing. GenAI can also lead to reductions in firm overhead and headcount, further enabling firms to offer more competitive pricing – and clients to expect it.”</p> <h2>Outsourcing to alternative legal service providers (ALSPs)</h2> <p><strong></strong><br /> With or without GenAI, one continued business trend is the practice of outsourcing work to alternative legal service providers (ALSPs). Rather than seeing ALSPs as a threat, most law firms and corporate legal departments turn to consider them valuable partners.</p> <p> Among the top tasks, more than half (57%) of legal professionals surveyed plan to outsource document automation, about half <strong>(49%) plan to reallocate legal research and analysis tasks</strong>, and 48% look to use ALSPs for contract drafting and review. With this approach, firms and legal departments expect to optimize their operational efficiency and, ultimately, save costs.</p> <h2>Lower demand for junior lawyers and paralegals?</h2> <p>“It is highly probable that GenAI will significantly reduce the need for certain categories of legal staff, particularly those engaged in routine, repetitive, and labor-intensive tasks,” says Stefano Mele, Partner at Gianni &amp; Origoni. “The automation of these tasks not only leads to increased efficiency, but also to <strong>a reduction in the demand for junior </strong><strong>lawyers</strong><strong>, </strong><strong>paralegals</strong><strong>, and support staff </strong>who traditionally perform these functions.</p> <p>”The good news is that legal professionals are optimistic about adapting to the ever-changing legal landscape. More than half of survey participants <strong>(56%) feel well-prepared to adjust their business practices</strong>, service offerings, workflows, and pricing models in response to the implementation of AI technology. This adaptability is pivotal as GenAI continues to evolve and integrate further into the legal industry.</p> <p> <strong>To read the full </strong><strong>legal industry </strong><strong>analysis,&nbsp;<a href="/en/know/future-ready-lawyer-2024"><strong>download the <em>2024 Wolters Kluwer Future Ready Lawyer Survey Report</em> &gt;&gt;</strong></a></strong></p> </div> </div> <div class="component wk-container col-12 alternate-background"> <div class="component-content"> <div class="title field-title" role="heading" aria-level="2">The 2024 Wolters Kluwer Future Ready Lawyer Report</div><div class="description field-description">Legal innovation: Seizing the future or falling behind?</div><div class="wk-container--cta field-cta"><a data-variantfieldname="CTA" target="_blank" title="Download Report" href="/en/know/future-ready-lawyer-2024" data-variantitemid="{E07F38BF-BB19-473E-A3A4-65762DF7470E}">Download Report</a></div><div class="row"></div> </div> </div> </div> </div> </div> <div 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