A US law firm's managing partner should state in each engagement letter how AI-assisted work is billed before the next rate review, because the American Bar Association's ethics committee says hourly bills must reflect actual time and a lawyer must explain the basis of any charge for an AI tool before making it.
The source is Formal Opinion 512, issued on 29 July 2024 by the ABA Standing Committee on Ethics and Professional Responsibility. It interprets the ABA Model Rules, and ethics opinions of this kind are advisory and not legally binding, in the words of the Jenkins Law Library. A firm answers to its own state's rules; most U.S. jurisdictions have adopted rules substantially similar to the Model Rules, so the letter should be checked against the state's fee rule and opinions before it goes out.
Clients were asked about price in a survey the Association of Corporate Counsel ran of 657 in-house lawyers and legal operations staff among its members in 30 countries from June to July 2025, with Everlaw, an e-discovery software company, and released that October. Of those answering, 59 percent had seen no noticeable savings yet from outside counsel's use of generative AI, and, asked about law firms that use generative AI, 61 percent were very or somewhat likely to push for a change in how legal services are delivered and priced. Seventy-two percent of respondents were in the United States and 65 percent worked at companies with $1 billion or more in revenue, so its figures mostly reflect companies of that size.
The opinion supplies the letter's terms. A lawyer who spends 15 minutes entering information into an AI tool to draft a pleading may charge for the 15 minutes as well as for the time the lawyer expends to review the resulting draft for accuracy and completeness. A tool that works like equipping the practice (grammar checking built into word processing software is its example) should be treated as overhead and not charged to the client absent a contrary disclosure in advance. A third-party service that charges per use to review thousands of contracts for one client can ordinarily be billed as an expense at actual cost, without a surcharge unless the client was told otherwise. On a flat fee, charging the same amount when a tool finishes the work much more quickly may be unreasonable. And a lawyer may not charge a client for learning to use a tool the lawyer will regularly use for clients.
Those five points become one section of the letter template. Within ninety days the managing partner approves that section, the head of billing sorts each AI tool the firm uses into overhead, pass-through expense or, for a tool the firm built itself, a rate agreed with clients in advance, and each relationship partner sends the section with the new rates. The opinion's summary of Rule 1.5(b) excuses the communication only for a regularly represented client whose terms are not changing, and a new rate changes them.
That section should cover billing alone. Where a client's informed consent is needed before its information goes into a self-learning AI tool, the opinion says that merely adding general, boiler-plate provisions to engagement letters purporting to authorize the lawyer to use GAI is not sufficient.
Learning time may be billable in one case the opinion names: a client explicitly requests a specific AI tool the lawyer does not know how to use, and even then the lawyer and client should agree on the new billing terms before any bill and, preferably, put that agreement in writing.
