Wall Street’s biggest banks are pressing their law firms to pass along what AI saves them, according to Financial Times reporting carried by Modern Counsel on September 3. Citigroup is “asking law firms competing for its business to explain how much money they are saving through AI.” Morgan Stanley plans “to increase competitive bidding and make greater use of alternative fee arrangements, including fixed fees.” Goldman Sachs is “examining how AI-related efficiencies should be reflected in legal bills.”
The target is the leverage model: firms bill by the hour for junior lawyers doing research, document review and contract work — the tasks AI now does fastest. The rates have kept climbing anyway: associates average $798 an hour, up 33 percent since 2023, with partner rates up 29 percent over the same period. PwC research cited in the piece puts the average AI time saving at 16 percent of working hours.
Fixed fees are the arrangement Morgan Stanley has said it will use more of.
For the valley: these are New York clients of New York firms, but the question Citigroup is asking — what did AI save you, and where is it on the invoice — is one a Palm Desert law office or an Indio accounting firm can now be asked by any client who read the same story.