Anthropic and AI: Towards the End of Billable Hours in Law

The Impact of AI on the Business Model of Law Firms

Jeff Bleich, now a legal advisor at Anthropic, recently expressed his belief that artificial intelligence could put an end to the billable hour model in the legal field. According to him, AI tools eliminate repetitive tasks, which devalues the time lawyers spend on such work. During his speech at the American Bar Association's White Collar Crime Institute in San Diego, Bleich stated that the billable hour could soon be a thing of the past. He said, "I don’t think the billable hour is the answer, and we’ve known that for a long time."

Bleich emphasized that artificial intelligence tools reduce the need for firms to hire numerous lawyers to perform lucrative but "boring" tasks. He added, "We now have technology that will eliminate the types of tasks that allow people to profit from tedious work." This does not align with the training of lawyers or what is expected of them.

The often-criticized billable hour is the standard method used by law firms to charge their clients. Lawyers track the work done for each client, often in six-minute increments, tally the time, and bill accordingly. While this system has been useful in helping businesses and other clients understand what they are paying for, it has also "created a gap," according to Bleich. Under the current system, "the interests of firms are at odds with those of their clients," he stated. Companies want lawyers to resolve issues quickly, but law firms are paid more when the work takes longer.

Bleich clarified, "Clients want you to solve the problem in the most efficient way possible and with the least amount of drama. And if you’re a business, the bigger, more dramatic, and complicated the case becomes, the more lucrative it is."

A Consensus Among Legal Experts

Bleich's remarks resonated positively with other experts present. Damon Hart, chief counsel at Liberty Mutual, stated that value no longer lies in the time spent. Anne Robinson, legal advisor at IBM, also expressed her willingness to collaborate with firms to develop more innovative billing methods.

Bleich insisted that he appreciates the work of external firms, but he encourages them to adopt business models that adapt to new realities. "We’re not going to underpay you and starve you," he said. "On the other hand, you need to have a business model that works. Firms that adapt more quickly and effectively will outpace others because they will be more attractive."

Legal Context and Current Issues

These statements come as Anthropic is involved in litigation with federal agencies after being blacklisted by the Trump administration following the collapse of contract negotiations with the Department of Defense. The law firm WilmerHale, which represents Anthropic, is also known for its historical connection to the invention of the billable hour by Reginald Heber Smith. WilmerHale was one of the law firms targeted by Trump last year with an executive order that was quickly blocked by a federal judge.

Bleich expressed admiration for firms that resisted Trump's executive orders, although he declined to comment directly on the ongoing case. He stated, "I like firms that show a bit of character," in response to a question about using firms that resisted Trump's executive orders aimed at them.