Separate cost, time and fee
| Layer | Question | Evidence |
|---|---|---|
| Vendor cost | What did the product, model, tool or seat actually cost? | Invoice, usage record and allocation method. |
| Lawyer time | What time was actually worked by each person? | Contemporaneous task and time record. |
| Fee basis | Hourly, fixed, contingent, subscription, value-based or hybrid? | Engagement agreement and applicable rules. |
| Disclosure | What must or should the client understand about the method or expense? | Engagement language and communication record. |
| Reasonableness | Does the fee satisfy the governing standard in context? | Matter facts and responsible-lawyer assessment. |
| Invoice record | Can each charge be explained without fictional time? | Work, outcome, cost and approval evidence. |
What ABA Formal Opinion 512 says
ABA Formal Opinion 512, issued July 29, 2024, addresses generative AI under the Model Rules, including fees. It explains that hourly billing must reflect time actually expended and discusses charging for technology-related expenses and efficiencies under the fee agreement and Rule 1.5 framework. The opinion is guidance based on the Model Rules; it is not controlling authority in every jurisdiction.
The practical lesson is precise: a lawyer should not record four hours because the task previously took four hours when the lawyer actually spent one. That does not mean every AI-assisted fixed fee is improper or that every efficiency must be passed through in one prescribed way. The agreement, communication, work and governing rules matter.
Keep Florida guidance in Florida scope
Florida Bar Ethics Opinion 24-1 addresses confidentiality, oversight, fees and advertising. The page states that advisory ethics opinions are not binding. It warns against improper double billing and discusses actual costs and overhead in the context of reasonable and non-clearly-excessive fees.
Use it for Florida lawyers and as comparative professional guidance where appropriate; do not call it a national rule or the “strictest” authority. Confirm current Florida rules, later guidance and the facts of the engagement.
Hourly work: record actual work
Time entries should describe the legal task and actual lawyer or staff time. AI generation time is not automatically lawyer time, and avoided time cannot be billed as if worked. Review, correction, source verification, client communication, configuration and supervision can be real work when actually performed and appropriately recorded.
Do not disguise a software charge as professional time. If the engagement allows a technology expense, identify the basis and allocation accurately. If the firm treats ordinary technology as overhead, do not quietly reclassify it because the tool contains AI.
Alternative fees: define the service and boundary
A fixed or value-based fee can align price with a defined service rather than minutes. The engagement should state the scope, assumptions, deliverables, exclusions, client responsibilities, revision boundary and what happens when the matter changes. Preserve the reasonableness assessment required by the applicable rules.
Subscription and portfolio arrangements need service levels, volume assumptions, response times, rollover or expiry, conflicts and termination terms. Contingent arrangements remain subject to their own rule and statutory requirements. AI efficiency does not erase those distinctions.
Decide how vendor cost is treated
Record seats, API usage, retrieval, third-party tools, storage and support separately from reviewer labor. Decide whether each item is firm overhead, included in a fee, or a client expense permitted by the agreement and rules. Use actual cost or the authorized method; do not invent a markup or allocation after the work is complete.
Completed-task economics should include retries, failed runs, source access, quality review and rework. That internal measure helps the firm price sustainably. It is not automatically the amount that belongs on the client invoice.
Communicate what is material
ABA Opinion 512 discusses circumstances in which consultation about AI use may be required, including client instructions and material risks. Fee communication can also require clarity about the basis or rate and expenses. State what the engagement and jurisdiction require; do not publish a universal claim that every use must be disclosed or that none needs disclosure.
A practical engagement record names the service, fee basis, included work, technology or expense treatment, material client choices and approval. It should be understandable without revealing sensitive model internals or turning the agreement into a technical manual.
Build an invoice that survives a simple question
- Identify the agreed service or task.
- Record actual human work and responsibility.
- Attach the authorized fee basis.
- Separate any permitted expense from professional time.
- Confirm the required disclosure or client approval.
- Review reasonableness under applicable authority.
- Preserve who approved the final invoice and any adjustment.
If the firm cannot explain a line without fictional time, hidden duplication or an unsupported expense, correct the record before billing.
Price the service the client can understand
Describe the client outcome, included work, responsible lawyer, expected inputs, review standard, delivery and limits before choosing the pricing form. A contract-review service might include intake, issue extraction, source verification, lawyer revision and one client round. The same AI tool used without a defined service can produce an invoice the client cannot evaluate.
Set change rules. New jurisdictions, document volume, negotiations, missing inputs or urgent timing can move the work outside the original assumption. Define who approves the change and how the price is communicated. This protects both the client and the firm without turning every efficient task into a time-sheet debate.
Count supervision as work, not as a quality slogan
AI-assisted delivery can require model selection, prompt or workflow design, source preparation, permission controls, exception handling, substantive review and correction. Record the actual people, minutes and skill involved. If supervision falls as the workflow matures, update the cost model instead of preserving an outdated internal estimate.
Competence and supervision cannot be reduced to whether a senior lawyer glanced at the final page. Define blocking errors, source checks and escalation. Internal quality evidence helps the firm determine whether the service remains responsible and economically viable; the client invoice still follows the agreed fee basis.
Test common billing scenarios separately
| Scenario | Question to resolve | Evidence |
|---|---|---|
| Hourly draft | What human time was actually spent generating, reviewing and revising? | Contemporaneous entries and work record. |
| Fixed-fee review | Is the scope clear and the fee reasonable under the applicable standard? | Engagement, assumptions and completed deliverable. |
| AI platform expense | Is the cost overhead, included, or an authorized client expense? | Agreement, vendor invoice and allocation. |
| Reusable internal system | Can development cost be charged on this matter and on what basis? | Policy, agreement and non-duplicative allocation. |
| Alternative fee | What value, risk or service level supports the price? | Client communication and outcome record. |
Add finance controls before scale
Use approved matter and activity codes for AI-assisted work where useful, but do not let the label replace a description of the legal service. Reconcile vendor usage to the correct client or internal account. Prevent the same seat, token or development cost from being charged twice unless the authorized allocation explicitly supports it.
Sample invoices for impossible time, duplicate entries, unexplained expenses and inconsistency with the engagement. Route exceptions to the responsible lawyer and finance or ethics owner. Measure corrections and client questions; do not treat low complaint volume as proof that the method is proper.
Keep internal economics separate from external billing
The firm should know contribution margin, capacity, review burden and reliability by completed task. Include model and tool costs, staff time, retries, failed runs, quality remediation and support. This reveals whether a low visible price depends on hidden professional labor or whether automation creates real capacity.
Internal economics can inform future price and service design. They do not retroactively change a client agreement or establish a permissible expense. Preserve that boundary so commercial analysis improves the offer without contaminating the invoice.
No universal AI billing model
Observed facts can show the engagement, actual time, vendor cost, completed work and invoice. Applicable professional rules and jurisdiction-specific guidance determine the legal and ethical assessment. AI can support a better pricing conversation; it does not authorize double billing, guarantee a fixed fee or eliminate lawyer judgment.
FAQ
Can a lawyer bill the time a task used to take before AI?
Hourly billing should reflect time actually worked. ABA Formal Opinion 512 warns against billing time that was not expended. Official source · checked 2026-09-03
Can a firm charge the client for an AI subscription or API use?
It depends on the engagement, how the cost is treated and applicable rules. Separate actual vendor cost from professional time and avoid unsupported expense treatment.
Does every AI-assisted matter need the same disclosure?
No universal answer follows. Client instructions, material risks, the fee arrangement and jurisdiction-specific duties determine the communication required.
Sources checked
- Formal Opinion 512, checked 2026-09-03.
- Ethics Opinion 24-1, checked 2026-09-03.
- Practical Guidance for the Use of Generative AI, checked 2026-09-03.
Operational information, not legal advice. Verify current terms, account configuration and applicable professional duties before use.