Document Type
Article
Publication Date
Fall 2025
Abstract
The legal profession is rapidly adopting generative AI technology. With this shift has come an increasingly common assumption that generative AI will significantly reduce or even bring an end to hourly billing. The logic underlying this conclusion seems intuitive: if AI reduces the time lawyers spend on certain tasks while eliminating others altogether, then the total number of billable hours will fall. That decline, in turn, could threaten the financial viability of hourly billing, despite its place as the dominant law firm compensation model over the past half century.
This Article challenges this assumption. It argues instead that the billable hour not only has a viable path to survive in the age of AI, it may well thrive as a result.
The argument proceeds in three parts. First, it explains why—despite decades of criticism—the longstanding structural justifications for the hourly billing model are sufficiently sticky to help the hourly billing model remain relevant even in an AI-enhanced word. Second, it introduces the CHRGE Equation (Compensation = Hours × Rate − Granted Reductions − Expenses), a simple but novel framework for understanding how firms generate revenue under the billable hour model. Because hours worked are only one part this equation, assessing the billable hour’s longterm viability requires analyzing how generative AI is likely to affect each of these CHRGE variables. Third, by looking at how generative AI is likely to affect each of the CHRGE variables, the Article shows why generative AI is unlikely to drastically diminish billable time across the profession and, even if it does, how generative AI adoption may improve other variables in ways that can offset this decrease in billable hours. To be clear, this Article is not a normative defense of the billable hour. Its contribution is instead descriptive and structural. It makes the case that, for both institutional and compensation-based reasons, it is far from inevitable that generative AI will render time-based billing obsolete.
Publication Citation
Stetson Business Law Review, Vol. 5, No. 1, Pp 42-86.
Scholarly Commons Citation
Perlin, Jonah, "How The Billable Hour Can Survive Generative AI" (2025). Georgetown Law Faculty Publications and Other Works. 2694.
https://scholarship.law.georgetown.edu/facpub/2694