Australian Law Firm Survey Looks at Law Firm Billing

The billable hour model that has long been the backbone of legal pricing could be headed for obsolescence, according to a new study from a legal technology firm in Australia.

The end of the long-used billable hour has been predicted for some time by legal experts and commentators.

Legal technology firm Litera reveals that Australian law firms are rapidly adopting alternative fee arrangements (AFAs) amidst current economic conditions.

The research found that over half of firms Down Under have revamped their pricing strategies due to financial pressures and other studies regarding the use of artificial intelligence in law firms have continued to grow.

A whopping 88 percent are now utilizing AFAs for at least half of their billable work, signaling a pronounced shift away from the traditional hourly billing model. With 50 percent of firms looking to reduce expenses and 46 percent raising rates, AFAs provide much-needed flexibility and client-centricity.

Technology, especially artificial intelligence (AI), is a key driver of this evolution.

Eighty percent of the surveyed Australian firms plan to implement AI solutions within a year to drive efficiency, profitability and create more value.

Globally, 55 percent of respondents intend to invest in integrated tech platforms over the next 12 months to streamline operations.

“As the legal industry evolves, leveraging AI, AFAs and innovative tech is crucial for delivering enhanced client value,” Stefan Steenveld, Litera’s APAC lead, said.

The findings depict an industry at an inflection point, with economic realities accelerating tech adoption and non-hourly pricing models.

Adaptability and innovation will separate the leaders from the rest as billable hours potentially become relics of the past. Litera’s comprehensive report captures this pivotal juncture for forward-looking legal professionals.