AI, Billing Emerge as Crossroads for Texas Law Firms and Clients

There is little debate at this point that generative AI is saving law firms time. The question now becomes: Who will save money?

Firms closely guard their billing formulas, which have long-been a sensitive topic for attorneys and their clients. Lawyers at firms large and small increasingly are grappling with how to factor in AI costs and savings.

“In hourly matters, we bill for the hours we actually worked, not what it might have taken without AI. If AI saves time, that savings passes to the client,” Norton Rose Fulbright officials Gina Shishima and Christy Bentz said via email. “Clients are billed less when AI creates genuine time savings,” said Shishima, the firm’s Austin-based US vice chair, and Bentz, its Houston-based chief client value and innovation officer.

Large corporate clients are asking firms how they’re using AI to lower the cost of work and what they do with saved time. It’s not clear if any are seeing smaller bills: large law firms nationwide ratcheted up rates by more than 10% last year, according to data from Wells Fargo.

The State Bar of Texas’ ethics committee last year said lawyers can’t charge for time saved by using generative AI. But the opinion gave little insight into how firms can account for their use of the tech in clients’ bills.

Norton Rose lawyers, who have access to AI platforms including Harvey, Legora, and Microsoft Copilot, are now expected to “redirect that recovered time toward higher-value strategic work on the same matter, or to other client matters they otherwise wouldn’t have capacity to take on,” said Shishima and Bentz.

Other prominent Texas firms such as Baker Botts, Skadden, Clifford Chance, Vinson & Elkins, Sidley Austin, Kirkland & Ellis, and Jackson Walker declined to comment for this story. Latham & Watkins and Simpson, Thacher & Bartlett did not respond to requests.

Fixed Fees as ‘Win-Win’

Norton Rose is evaluating what “future service delivery and business models” will look like in three to five years, Bentz said. The firm is examining “variables like staffing, pricing structures and client collaboration.”

NRF leaders have identified existing fixed fees and alternative fee arrangements as a “viable win-win improving efficiency in ways that allows the firm to deliver high-quality work at a predictable price point that works for both the client and the firm,” Shishima said.

“The future of the legal practice belongs to firms that are bold enough to change their structures, norms, and hiring decisions around AI,” said Kevin Frazier, the first AI innovation and law fellow at the University of Texas School of Law. “The firms that stick to the status quo will see upstart, AI-forward law firms eat away at their business.”

Firms are paying between $50 and $350 per attorney each month for AI tools, Greg Lambert, chief knowledge services officer at Jackson Walker, estimated in August. The tech also adds 30% in cost to existing tools.

Meanwhile, the 200 largest US firms saw revenue increase by about 13% on average last year, boosted largely by a double-digit leap in billable rates, Wells Fargo found. Firms also experienced expenses climb by 10.2% due to headcount growth, non-equity partners, and tech. Firms are expected to spend more on AI as they adopt new tools, pay license fees and train staff.

Bloomberg Law

The Texas guidance is similar to that from lawyer oversight entities in California, New Jersey, and other states. The Texas bar’s professional ethics committee said in its February 2025 opinion that firms can use subscription fees to charge clients for services. The rise of AI may also push firms and their clients to more broadly adopt contingency or success-fee arrangements.

Legora CEO Max Junestrand told Bloomberg Tech in March that both “consumption and outcome-based pricing models will make a lot of sense for our clients—and also in turn their clients.”

Frazier said he suspects “firms will start to offer different tiers of human review of AI tools” and what’s key is they “make such tiers understandable to clients—flagging possible risks and shortcomings.”

Norton Rose holds about 1,000 licenses for AI tools, reporting two-thirds of its lawyers touch tech regularly. Only a few clients from “highly regulated sectors handling sensitive data” in financial services and healthcare caution against its use in their legal matters, Shishima said. Most expect lawyers to use AI and an increasing number of them are “AI-literate,” building their own tools and “raising the bar for what they expect from outside counsel,” Bentz said.

Norton clients aren’t explicitly asking “to show me where you are saving me money on my bill with your AI,” Bentz said, but she believes “it’s implied” that clients are looking to cut costs.

Running ‘Lean’

Smaller firms are also investing in generative AI.

Taylor Freeman, the partner-in-charge of AZA Law’s AI application, policies, and strategies, said the Houston-based litigation boutique bought licensed user slots for about 40% of its 60-member team to use Harvey starting in mid-2025.

Today, about 75% of lawyers have seats. AI has provided firm with an “edge” in commercial and intellectual property trials, Freeman said. “It is conducive to how we run. The firm runs lean cases and gives associates a lot of responsibility early on,” he said. “You can run it a lot leaner as long as everybody knows how to use these tools appropriately.”

For now, AZA isn’t “billing iteratively” for its AI use, Freeman said. Instead, the firm is “kind of treating it like overhead"—but that may change.

“It’s not something that’s been set in stone. It’s moving so fast and it’s still so new,” he said. “We are aware that this is a changing market, a rapidly evolving market.”

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