In India, law firms still rely heavily on the traditional ‘billable hours’ model, charging clients for every hour spent drafting, researching, or advising. While this system has worked for decades, it’s now being tested by the rise of AI-driven legal tools and changing client expectations.
With the introduction of Artificial Intelligence, tasks like legal research, drafting, and document review that once took hours can now be completed in just minutes. This is one of the key reasons many law firms hesitate to adopt AI, as it could directly impact their billable hours and, therefore, their revenue. As a result, several firms still prefer sticking to the traditional method.
Despite all these concerns, top-tier firms like Khaitan & Co. and Shardul Amarchand Mangaldas are actively using AI to automate routine legal tasks, many of which traditionally contributed to their billable-hours culture.
So the question arises:
Aren’t they worried about their revenue being reduced, or has AI actually strengthened it?
The ‘Billable Hours’ challenge and how AI resolves it
The primary reason law firms remain cautious about adopting AI-driven task automation is the potential for ‘revenue decline’. When AI can complete routine legal work like document review, research, and drafting in just minutes, firms worry that faster delivery will inevitably result into lower billable hours. This efficiency contradiction hits hard as with the use of AI-powered legal tech platforms firms deliver faster and accurate results, but with this clients begin questioning traditional legal fee structure. They expect fees to drop in line with the reduced time spent, putting pressure on firms to justify their value beyond hours logged.
The potential solutions that leading law firms are adopting to deal with this challenge is:
Redirect saved hours to High-Value strategy:
Indian law firms can balance AI’s ‘time compression’ by shifting their hours toward work that truly needs human judgment like negotiation strategy, risk counselling, or creatively structuring deals. AI can take over the heavy lifting of drafting, legal research, and review but it can’t replace the instinct and experience lawyers bring to India-specific matters.
Firms like Trilegal show how this works in practice as they automate routine due diligence, freeing up their teams to focus on specialised advisory work. This way, they maintain revenue while delivering high-value, niche services that only human lawyers can provide.
Communicate the ‘Value Story’ clearly to clients:
Clients often assume that if something gets done faster, it should automatically cost less. But speed is only one part of what AI brings to the table. Firms need to clearly explain how AI actually improves the depth of analysis, strengthens risk coverage, and makes outcomes more predictable, not just quicker.
To do this well, partners need simple, consistent scripts and playbooks that help them express the real value with stronger assurance, wider scenario testing, and better documentation.
Turn AI outputs into productised services:
As AI makes certain tasks repeatable like NDA reviews or basic compliance checks firms don’t have to offer this work by the hour anymore. Instead, they can productise it by package it as a fixed-fee service, subscription, or bundled offering. This transforms what would otherwise be scattered, low-value time entries into a clean, predictable, and high-margin product that clients immediately understand and can budget for.
Hybrid pricing instead of pure hourly:
Firms don’t have to choose between hourly billing and fixed fees, they can blend the two. For complex and unpredictable matters they can stay on hourly rates, while AI-powered tasks like standard contract reviews, compliance checks, or due diligence can be offered at fixed or capped fees. This way, firms protect their revenue on strategic work, but still give clients the predictability and transparency they expect.
By using these approaches firms can effortlessly increase their work efficiency without affecting their revenue.
Conclusion
AI is not here to affect the firms revenue instead it’s here to boost it. By taking over almost half of the routine work lawyers spend their days on, it frees up time for what clients actually value which smart strategy, clear outcomes, and seasoned judgment. And in India’s increasingly compliance-heavy landscape, that human insight matters more than ever.
Firms that use AI to automate their routine legal work are not just staying competitive but they are signing more clients too. Fixed-fee packages, value-based pricing, and productised services are helping them earn healthier margins, while those resisting the shift are losing clients to faster, more agile competitors. We’re already seeing this play out with firms like Trilegal and Khaitan, who are blending AI-driven efficiency with high-quality expertise to build more predictable and profitable models.
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