Wall Street’s biggest banks have started asking their law firms a pointed question: what is AI saving you, and why isn’t it on our bill? That’s the Financial Times reporting carried by Modern Counsel on September 3. Citigroup is asking firms competing for its business to explain how much money they’re saving through AI. Morgan Stanley plans to bid work out more competitively and make more use of alternative fee arrangements, fixed fees among them. 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, which is exactly the work AI now does fastest. The rates have kept climbing anyway. Associates average $798 an hour, up 33 percent since 2023, and partner rates are up 29 percent over the same stretch. 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 says it will use more of. Whether the other two banks go the same way isn’t in the piece.