A pronouncement from the American Bar Association (ABA) is in the news. With the advent of AI, there are many seeking solace regarding the potential impacts on the practice of law.
There is a persistent myth in the American legal world. A great many people assume that the ABA is some manner of regulatory agency with jurisdiction over lawyers. It is not. I am a lawyer, and the ABA does not speak for me any more than any other organization to which I do not belong or contribute. It is fair to say it speaks for many members, but it neither regulates nor represents all lawyers.
The ABA is a voluntary trade association that elects to study issues and make pronouncements and recommendations. Granted, there are a great many intelligent people who are members. They are human, each with flaws, predispositions, and perhaps agendas. That said, some of their pronouncements and recommendations have received warm receptions, but they are not in any manner binding unless adopted by some regulatory authority.
A Recent Thompson Reuters article questioned the impact of an ABA pronouncement: Is ABA Formal Opinion 512 off the Mark? And if so, what can law firms and GCs do about it? This focuses on the "thorny ethical issues" AI presents for "competence, confidentiality, communications, candor toward the tribunal, and supervisory responsibility." I would suggest that it is perhaps not so thorny nor really novel.
A critical point is hourly attorney fees. There are those who foresee AI large language models (LLM) making lawyers more efficient, thus leading to similar or even enhanced output in exchange for far less input (more lawyering for less invested time).
As I wrote that, I was drawn inexorably back to Sammy Hagar and his hit I can't drive 55, a rebellious reaction to the 1970s absurd political solution to increased gasoline costs and fuel shortages. President Carter pushed for 55-mile-per-hour speed limits, and they were as frustrating as they were absurd. Sammy intoned:
"What used to take two hours now takes all day."
I hear your confusion. How could AI have that impact? No, reverse it. With AI, it may soon be that
"What used to take all day now takes two hours."
So far, we have not seen this impact among the professionals. I have read many who say that the LLM is fast, but fact-checking the output is as time-consuming as doing the work in the old manner. Granted, not all those who practice law are professionals, but that is a different concern altogether ("but that is a different concern").
So, if Lawyer ONE can do a task in an hour, but it takes Lawyer TWO two hours, what should Lawyer ONE bill for the task? That may seem like a trick question, but it's not. Lawyer ONE can bill one hour. See, the simplicity is in the honesty of charging the time it required. Perhaps Lawyer ONE is therefore worth more per hour, but that is a matter of negotiation and contract.
Back in the dark ages (1993), the ABA addressed that essential question and concluded:
"‘the lawyer who has agreed to bill on the basis of hours expended does not fulfill her ethical duty if she bills the client for more time than she has actually expended on the client’s behalf.’”
In the agreement with the client, there is reliance and constraint. The lawyer has made a contract. They have consented to a set of terms in which value will be exchanged, services for money. It is a concept as old as time itself (Og and Grok likely entered the first such value exchange in which some fresh meat was exchanged for a warm pelt in about -20,000 BCE). Commerce is older even than taxes.
This ABA opinion may seem to end the discussion. But what if the money is sought from someone with whom there is no such contract, no such agreement? Ah, the apparently fatal rub in the prevailing party fee. Perhaps less fatal, but as intriguing in the contingency fee that contains no such "basis of hours?"
The article on ABA Formal Opinion 512 describes building on the 1993 conclusions and formalizes that if
"a lawyer using GenAI only spends 15 minutes to draft a pleading, that lawyer may only charge for that 15-minute period, plus whatever time the lawyer spends reviewing the draft."
That is back to the current state of AI and the incredible time required to verify output before the trust of filing. Formal Opinion 512, however, specifically reminds that
"such a billing practice must be followed, 'if a lawyer has agreed to charge the client on [an hourly] basis[.]'"
Horace Middlemier* always notes that in all the law there is persistently an "if" or "but" and he can usually use both to drive a Mack truck-sized hole through any statute or regulation.
The "if" caveat in Formal Opinion 512 is critical. Certainly, the thoughts on contingency fees and prevailing party fees remain (anyone who does work on a contingency basis, who might nonetheless charge an opposing party if they prevail, may seem free to leverage the 15 minutes into the 15 hours it would have taken without AI?). There are some who believe that some contingency billing is padded already and that paralegals, law clerks, and others are leveraged similarly to how AI will be.
However, the broader point is that the day of the billable hour may be over. The limitation imposed by the necessity of good faith and fair dealing, so fundamental to contract law writ large, may deter reliance on technology. As the legal profession is sucked into the vortex of AI, LLMs, chatbots, and more, the "billable hour" contract may have to yield the field.
To what paradigm? The proposal most often voiced is legal services delivered on the foundation of success. The number of inputs is irrelevant, and the outcome is the deciding factor. If the dispute is resolved by a deadline, submitted to a mediation process, effectively presented to an adjudicator, or otherwise concluded within the contract terms, then a sum certain is due. Delay means less remuneration. The engagement of anything that drives speed or performance is the lawyer's burden, but it drives the remuneration described.
The Thompson Reuters story suggests that the escape from hourly paradigms is a "potentially massive loophole." There is a prediction that alternative fee paradigms will come, and some will be potentially regrettable. All experimentation results in some untoward or unsuccessful outcomes. That is why it is called "experimentation" instead of merely "change."
And, as is often the case with regret, the value exchange may be viewed in retrospect with remorse ("buyer's remorse," but either party might experience the emotion). That it is different should not be the test for success. Instead, the question will be whether it is better, ethical, and professional. Each lawyer will have to make such determinations, though some may rely on the groupthink that is the ABA.
