Law Firms and Clients Have No Idea If AI Is Being Used on Their Cases
More than two-thirds of corporate legal professionals don't know whether their outside law firms are using AI on their matters, according to a Thomson Reuters Institute report released in March 2026. The visibility gap creates uncertainty for both sides and threatens to erode trust in relationships that often span years.
The disconnect runs deeper than simple lack of communication. While more than half of law firms say they use or are considering generative AI, and more than half of corporate legal departments believe their outside counsel should use it, neither side is measuring whether AI actually improves legal service delivery. Eighty-five percent of law firm respondents and 75% of corporate legal department respondents said their organizations either don't collect return-on-investment data on AI usage or are unsure if they do.
The Billing Problem
The measurement gap creates a more immediate concern: how AI efficiency affects what clients pay. Half of legal professionals surveyed view AI as either a major or moderate threat to law firm revenue.
Corporate law departments are caught between skepticism and suspicion. One attorney said: "Billing has remained the same as it did before. So, either they are not using AI tools efficiently, or they are just doing double work." A chief legal officer was blunter: "I fear that firms will use AI to cut time, but continue to bill for the hypothetical amount of time a task would have taken without it."
These concerns point to a fundamental mismatch. The hourly billing model assumes a fixed relationship between time spent and value delivered. When AI reduces time spent, that model breaks down.
Why Firms Aren't Talking About It
Law firms report confidence in their ability to explain AI's value to clients. Yet they're not having those conversations. Some corporate legal departments suspect firms worry that discussing AI usage will raise questions about quality and accuracy. Others think firms may feel threatened by the technology itself.
About three-quarters of respondents on both sides said it's the firm's responsibility to initiate these discussions. But corporate legal departments are waiting, and the conversations aren't happening.
What Needs to Change
Law firms should:
- Tell clients how AI is being used on their matters and ask for feedback on which tasks should or shouldn't involve AI
- Develop a clear billing strategy that accounts for AI-driven efficiency
- Explain charges in terms of value delivered, not just time and rates, including the human expertise that complements the technology
Corporate legal departments should:
- Start the conversation themselves if outside firms won't, rather than waiting
- Set clear expectations about how and when AI will be used, including data security and accuracy oversight
- Track efficiency gains by comparing historical matter timelines and costs against AI-enabled engagements, then verify they're receiving fair pricing for the value gained
Both sides need data. Without it, trust erodes and long-standing relationships suffer. Transparent discussion about AI usage and its business impact strengthens client-firm relationships and ensures both parties benefit from the technology.
For legal professionals looking to understand AI's practical applications in their field, resources like AI for Legal and the AI Learning Path for Paralegals offer grounded guidance on implementation.
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