Legora, a major legal AI supplier, has shifted to consumption-based pricing for its most advanced product, charging customers based on actual usage rather than a flat per-user fee. The move signals a broader pricing upheaval in legal technology that will force law firms and in-house legal departments to rethink how they budget for AI tools.
For decades, law firms have clung to the billable hour while the software they buy was sold on a predictable per-seat basis. That model is now cracking. Legora's announcement marks one of the first concrete moves by a leading legal AI vendor to tie pricing directly to how much AI work a team actually performs.
"Per-seat pricing made sense to get the market started, because it was easy to buy, the product was simpler and usage was more predictable," said Alex Fortescue-Webb, global head of legal engineering at Legora. "It was never the right long-term model for AI, because usage varies too much between people for a flat fee to hold up."
The mechanics of pay-per-use legal AI
Under consumption-based pricing, suppliers may provide customers with a finite amount of AI tokens, with costs scaling according to task complexity. Fortescue-Webb said this means a simple query is priced differently from a heavy, multi-document review. "A team that puts 10-times more work through the agent will pay more for that work, and the team next door that doesn't, won't."
Customer reaction has been positive so far, he added, because the model gives legal teams a granular view of what each AI interaction costs. "It enables users to assess ROI at a much more granular level than ever before."
Research firm Gartner predicts that by 2028, more than 35% of company legal departments' new spending on legaltech will be tied to AI consumption. But the market has not settled on a single approach. Mark Brennan, global managing partner for digitalisation at Hogan Lovells, said suppliers are exploring several alternatives, including hybrid models that combine a fixed subscription with usage allowances or credits. "The market has not settled on a single approach," he said, partly because legal AI suppliers are "being incredibly competitive to win law firm business."
The budgeting headache
Variable pricing creates a predictability problem. "The biggest headache is predictability," said Patricija Corey, legal operations manager at Franklin Templeton. "Legal teams are used to software being a fairly fixed annual expense. Token pricing turns AI into a variable cost, and the more successful you are at driving adoption, the more you may spend."
Corey pointed out that a lawyer asking a simple question, reviewing a 100-page contract, or running an agent across thousands of documents are very different activities - but the end user may have no idea what each one costs. That makes return-on-investment calculations harder. Her solution is not to cap token usage with blanket rules, but to build guardrails: dashboards that monitor consumption and agreed spending limits.
Ben Allgrove, partner and chief innovation officer at Baker McKenzie, said variable costs will challenge both in-house teams and law firms trying to predict delivery costs in advance. "The days of throw the latest and newest AI at every problem are over." Baker McKenzie is planning for consumption-based AI pricing to become a "significant, new marginal cost" in delivering AI-enabled legal services.
A clearer view of legal work
Some in-house leaders see a potential upside. Andrew Cooke, chief legal officer at Perk, noted that law firms do not provide minute-by-minute visibility on their fees. If legal AI suppliers build cost-tracking features into their software, it could "ease the pain" of tracking legal costs by attaching a dollar figure to specific tasks. Tracking consumption may not just be a burden - it could become a tool for understanding where legal spend actually goes.
Gartner analyst Shannon Nakamoto estimated that consumption-based pricing could increase IT costs for law firms and legal departments by as much as 25%, particularly for information-intensive work like litigation and M&A due diligence. "A lot of company legal departments and law firms have got used to using these tools or have experimented with them and use them regularly now," she said. The new pricing introduces "a layer of additional cost that may be hard to predict or hard to budget for."
Why this matters for legal professionals
Consumption-based pricing will force legal teams to treat AI like any other variable business cost - something to monitor, measure, and justify. Lawyers who use AI tools without understanding their per-task cost risk blowing through budgets as adoption scales. For paralegals and legal operations professionals, building internal tracking and governance around AI usage is no longer optional. Courses on AI for legal professionals and structured learning paths like the AI learning path for paralegals are becoming practical necessities for teams that need to evaluate AI costs against outcomes. The firms and departments that get this right will have a clearer picture of both their technology spend and the true cost of legal work.
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