Does GenAI necessitate the end of the billable hour?

Betteridge suggests no...

To take a worked example - if a lawyer works 20 hours on a matter and charges £500 an hour, then they bill the client £10,000

If GenAI (or any other tech/efficiency gain, for that matter) takes away 10 of those hours, then based on the current billable hour model they will charge the client £5,000 (10 hours x £500)

The consensus view seems to be to introduce value based pricing (generally) or fix the fee at the original £10,000 (specifically) before introducing the GenAI efficiency

The alternative is that the lawyer continues to charge an hourly rate, but instead of charging £500 an hour, they now charge £1,000

£1,000 x 10 = £10,000

They could probably go some way to justifying that - the previous £500 was an average of the value delivered in any given hour, some of it was very high value (say £1,000) some of it was very low value (say £1)

We've automated the very low value work and so all that is left is the very high value work - the hourly rate has gone up to reflect that

I write this, neither as a prediction of what will happen nor as a defence of the status quo

But rather to flag that this is not my first time around the 'death of the billable hour' merry-go-round and there are a few twists and turns to play out

It's certainly not as simple as it might appear

But although I don't see an inherent need to move to fixed fees, there is certainly a need for firms to seriously consider the impact of GenAI on their pricing model

For all the options available, taking a 50% hit on revenue in this example is clearly a poor choice to make