In this 58th episode of Charting Change in Legal, Caroline Hill, Editor and Publisher of Legal IT Insider, and I discussed the 2026 CLOC Global Institute, revisiting law firm economics, understanding the cost of Legal AI, and looking forward to Lexpo 2026.
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(00:00):
[Music]
(00:10):
Welcome to Charting Change in Legal! I am one of your host, Caroline Hill, and the editor of Legal IT Insider, and I'm joined today by my esteemed co-host.
I'm a host, esteemed, Ari Kaplan. I am an analyst that covers the legal industry, and I just want to compliment the enthusiasm with what you introduced us.
I feel like there's some fun banter about to take place about what change we are charting in legal.
(00:38):
I will start by saying that we are now on the heels of clock, and I just came back, you know, clock was great.
And really interesting moment. I don't know why, but I feel like we talk every other week, every few weeks, and each time it would be interesting to go back and see how often we say that.
(01:03):
We are just at another moment, as if it used to be, you know, every year, then every six months, and now every single event is another moment that has announced a release of something interesting that has charted a particular trend that we hadn't seen.
Or has validated some data, I like you, I'm very lucky to get to have conversations with people who are driving that change in the moment.
(01:28):
And so I love that we get to kind of recap, but it seems like each time we recap, we are sort of moving into another phase, which is just wonderful, wonderful place to be.
That's kind of where we want to be. I'm jealous you're at clock. So tell me about this one thing. So one of the headlines that made me smile and that people have brought up subsequently was the fact that they're the end of the bill of the hour.
(01:58):
OK, so the head of legal operations matter announced that Mike Haven, who we both know, announced that he thought that there would be an end of the bill of the hour in five years.
And people have been talking to me about that sense that seems to be one of the things that drew headlines. I don't, I mean, I suppose that was what was the reaction was that something people were talking about a lot like I was like, I was, I've become a bit, I'm saying about the bill of the hour now.
(02:25):
I'm a bit like, I think it's just kind of, I don't know if like it's kind of done, but, but what was the reaction?
I've never dispute Mike, who is a clear leader in our space. I actually moderated a panel about pricing. So kind of related, but a different discussion. And also there were some research that came out a few weeks before clock. I think by Lexus next counsel link, which talked about how based on their research, a very small percentage of people are actually using and deploying alternative fees relative to using the bill of the hour.
(03:00):
And they were talking about what the ramifications are of that. And you know, Mike is in a wonderfully luxurious position of working for one of the most dynamic innovative richest companies on earth. And so they have a level of influence that most other organizations don't have in terms of dictating billable versus flat fee.
(03:21):
I will say that on my discussion, which I was lucky to facilitate between the head of legal operations for a large company and the pricing leader at a large law firm. And she talked about that calculus at a tactical level. And it was really interesting like when it made sense.
How they perceive bill of hour, what that means for talent and there are a lot of implications for changing the economics of legal practice. And that did come up at clock among other areas of discussion, but it was a very vibrant conversation.
(03:57):
I think that we should congratulate oh, Yangosnell on his first true clock as you know, being the president in planning and his entire team. It just was flawless. Although it's moving back. It was in Chicago this year. It's moving back to Las Vegas next year. And I think I think a lot of people had a lot of good things to say about it.
I think I need to go next year. It sounded great. And I mean, what was interesting. So I've had two conversations that look quite interesting. One is from a law firm that is using
(04:31):
a shadow to underpin a kind of retainer and with their client and I'm going to be writing about that. So it's it's like so the other thing I was going to say is that clients are not necessarily always being very helpful in terms of they're still going back and asking for hours. This is the feedback I'm getting right.
The fans are really trying to move the dial in some cases and they're saying they're reporting that some clients are really trying to you know, they're still saying what can you tell me what that is an hour. So one of the solutions is to create a kind of they're still not going to ditch necessarily the bill of hours as an underlying metric and understanding of how you measure value to some extent.
(05:10):
They're creating interesting constructs on the top partly facilitated by better technology and this retainer model which we have seen in the past. It's not brand new, but it's tricky right because
there's probably someone often takes a bath, but they this fan that I'm going to be writing about they're created a retainer it's fixed and they are then incentivized to use technology to the best effect which obviously is this conversation that we keep having in terms of why the bill of hours such a bad thing when it comes to technology.
(05:45):
It's fascinating the one thing that that keeps coming up that also I think is going to become relevant to this conversation is about when the big tech vendors stop subsidizing the token that so that the cost of AI and what firms are starting to worry about is that they're having these conversations at the moment everything is subsidized they've got flat fees they're not being really charged for the actual cost of tokens.
(06:08):
That's some way to sign a things going to change and this is a conversation that keeps coming up and time and time again as people put these arrangements into place.
Well, ironically that is a concern that you now are using technology to drive costs down and you see the expectation that that bills will drop.
(06:29):
However, once the subsidies change and if the prices don't fall you'll now have situations where it may be more economical to have humans do the work then have the machines do it especially because you pay this validation tax regardless to make sure that you don't suffer any kind of embarrassing or even worse real risk issue with relying simply on the machine.
(06:58):
That part of the discussion is increasingly happening as people start to realize the economics of we're entering a phase I don't even know we were in six months ago when we had this conversation we've moved from experiment and fun and whimsy to real application to now thinking if we really create models where we fully rely on this and then it's completely shifted we're going all the way back and this was all kind of like a little bit of a wasted exercise.
(07:27):
Yeah, I mean it's fascinating that I was chatting with someone who's saying then it may just become the old way of doing things becomes the better way and the more and the more cost effective way and and that's going to be the same for clients right so and it will depend on how much you use it.
(07:48):
The more you use it the more you're likely to be susceptible to this type of you know the these these high charges which make make it interesting from an in that in house debate that we keep having in terms of in house doing more internally because the cost more effective.
Whether that will also continue to be the case because obviously you've got the law firms with the bigger scale and the perhaps potentially being able to drive down cost because of the size of their operation and the fact they are you know actual lots of different people that's going to be fascinating as well.
(08:21):
The one trend that I don't think will return or revert is the stratification of legal work every bit of research that I've been doing is indicating that leaders are starting to parse out what is really human centric judgment rich work and what could we eliminate from having a human do and whatever technology or service ends up taking advantage of it.
(08:50):
Taking advantage of that different level of work it probably won't go back to a human doing it or or a high price human doing it and so in that sense I think efficiency will stay and we will get further and make progress and it will be a positive development but the idea of what what the cost will be because that tends to be a meaningful ROI metric is still you know an interesting conversation.
(09:19):
And the sector is quite immature when it comes to that I remember I remember when Microsoft because when we started to all move to the cloud and then we were so we were used to these fixed enterprise costs and you know we could budget and all this kind of stuff and then there was you know that big hike from Microsoft is absolutely outrage and I spoke to Ben Weinberger who at the time was the head of operations for which whose book I just received if anyone wants to read my mind.
(09:46):
Ben Weinberger the death of big law.
He's told me if you're not reading it yet.
Yes it's called the death of big law.
You know we'll have to all of them we'll have to have this conversation in person at the Lexpo conference in Amsterdam.
(10:14):
We are bringing the book but yeah he said he was like this is no surprise you know you need you need to get whether you need to modernize your thinking in terms of the way that costs are going to spike and the way that you're not going to be control of them.
This is another evolution of that isn't it and having to mature and deal with the fact that you have to budget for things that you can't always control.
(10:36):
Well our next conversation will be live next and it will be in Amsterdam and we will sit side by side and try to do the most energetic introduction we can possibly in and who knows maybe we'll have some guests walk by in our conversation I will I will look forward to that so.
I can't wait I can't wait.
Carol Hill always a privilege thank you so much and thanks of course to our listener we thank you we think so highly of you thank you.
(11:05):
Thanks everyone.
[Music]
[Music]
(00:10):
Welcome to Charting Change in Legal! I am one of your host, Caroline Hill, and the editor of Legal IT Insider, and I'm joined today by my esteemed co-host.
I'm a host, esteemed, Ari Kaplan. I am an analyst that covers the legal industry, and I just want to compliment the enthusiasm with what you introduced us.
I feel like there's some fun banter about to take place about what change we are charting in legal.
(00:38):
I will start by saying that we are now on the heels of clock, and I just came back, you know, clock was great.
And really interesting moment. I don't know why, but I feel like we talk every other week, every few weeks, and each time it would be interesting to go back and see how often we say that.
(01:03):
We are just at another moment, as if it used to be, you know, every year, then every six months, and now every single event is another moment that has announced a release of something interesting that has charted a particular trend that we hadn't seen.
Or has validated some data, I like you, I'm very lucky to get to have conversations with people who are driving that change in the moment.
(01:28):
And so I love that we get to kind of recap, but it seems like each time we recap, we are sort of moving into another phase, which is just wonderful, wonderful place to be.
That's kind of where we want to be. I'm jealous you're at clock. So tell me about this one thing. So one of the headlines that made me smile and that people have brought up subsequently was the fact that they're the end of the bill of the hour.
(01:58):
OK, so the head of legal operations matter announced that Mike Haven, who we both know, announced that he thought that there would be an end of the bill of the hour in five years.
And people have been talking to me about that sense that seems to be one of the things that drew headlines. I don't, I mean, I suppose that was what was the reaction was that something people were talking about a lot like I was like, I was, I've become a bit, I'm saying about the bill of the hour now.
(02:25):
I'm a bit like, I think it's just kind of, I don't know if like it's kind of done, but, but what was the reaction?
I've never dispute Mike, who is a clear leader in our space. I actually moderated a panel about pricing. So kind of related, but a different discussion. And also there were some research that came out a few weeks before clock. I think by Lexus next counsel link, which talked about how based on their research, a very small percentage of people are actually using and deploying alternative fees relative to using the bill of the hour.
(03:00):
And they were talking about what the ramifications are of that. And you know, Mike is in a wonderfully luxurious position of working for one of the most dynamic innovative richest companies on earth. And so they have a level of influence that most other organizations don't have in terms of dictating billable versus flat fee.
(03:21):
I will say that on my discussion, which I was lucky to facilitate between the head of legal operations for a large company and the pricing leader at a large law firm. And she talked about that calculus at a tactical level. And it was really interesting like when it made sense.
How they perceive bill of hour, what that means for talent and there are a lot of implications for changing the economics of legal practice. And that did come up at clock among other areas of discussion, but it was a very vibrant conversation.
(03:57):
I think that we should congratulate oh, Yangosnell on his first true clock as you know, being the president in planning and his entire team. It just was flawless. Although it's moving back. It was in Chicago this year. It's moving back to Las Vegas next year. And I think I think a lot of people had a lot of good things to say about it.
I think I need to go next year. It sounded great. And I mean, what was interesting. So I've had two conversations that look quite interesting. One is from a law firm that is using
(04:31):
a shadow to underpin a kind of retainer and with their client and I'm going to be writing about that. So it's it's like so the other thing I was going to say is that clients are not necessarily always being very helpful in terms of they're still going back and asking for hours. This is the feedback I'm getting right.
The fans are really trying to move the dial in some cases and they're saying they're reporting that some clients are really trying to you know, they're still saying what can you tell me what that is an hour. So one of the solutions is to create a kind of they're still not going to ditch necessarily the bill of hours as an underlying metric and understanding of how you measure value to some extent.
(05:10):
They're creating interesting constructs on the top partly facilitated by better technology and this retainer model which we have seen in the past. It's not brand new, but it's tricky right because
there's probably someone often takes a bath, but they this fan that I'm going to be writing about they're created a retainer it's fixed and they are then incentivized to use technology to the best effect which obviously is this conversation that we keep having in terms of why the bill of hours such a bad thing when it comes to technology.
(05:45):
It's fascinating the one thing that that keeps coming up that also I think is going to become relevant to this conversation is about when the big tech vendors stop subsidizing the token that so that the cost of AI and what firms are starting to worry about is that they're having these conversations at the moment everything is subsidized they've got flat fees they're not being really charged for the actual cost of tokens.
(06:08):
That's some way to sign a things going to change and this is a conversation that keeps coming up and time and time again as people put these arrangements into place.
Well, ironically that is a concern that you now are using technology to drive costs down and you see the expectation that that bills will drop.
(06:29):
However, once the subsidies change and if the prices don't fall you'll now have situations where it may be more economical to have humans do the work then have the machines do it especially because you pay this validation tax regardless to make sure that you don't suffer any kind of embarrassing or even worse real risk issue with relying simply on the machine.
(06:58):
That part of the discussion is increasingly happening as people start to realize the economics of we're entering a phase I don't even know we were in six months ago when we had this conversation we've moved from experiment and fun and whimsy to real application to now thinking if we really create models where we fully rely on this and then it's completely shifted we're going all the way back and this was all kind of like a little bit of a wasted exercise.
(07:27):
Yeah, I mean it's fascinating that I was chatting with someone who's saying then it may just become the old way of doing things becomes the better way and the more and the more cost effective way and and that's going to be the same for clients right so and it will depend on how much you use it.
(07:48):
The more you use it the more you're likely to be susceptible to this type of you know the these these high charges which make make it interesting from an in that in house debate that we keep having in terms of in house doing more internally because the cost more effective.
Whether that will also continue to be the case because obviously you've got the law firms with the bigger scale and the perhaps potentially being able to drive down cost because of the size of their operation and the fact they are you know actual lots of different people that's going to be fascinating as well.
(08:21):
The one trend that I don't think will return or revert is the stratification of legal work every bit of research that I've been doing is indicating that leaders are starting to parse out what is really human centric judgment rich work and what could we eliminate from having a human do and whatever technology or service ends up taking advantage of it.
(08:50):
Taking advantage of that different level of work it probably won't go back to a human doing it or or a high price human doing it and so in that sense I think efficiency will stay and we will get further and make progress and it will be a positive development but the idea of what what the cost will be because that tends to be a meaningful ROI metric is still you know an interesting conversation.
(09:19):
And the sector is quite immature when it comes to that I remember I remember when Microsoft because when we started to all move to the cloud and then we were so we were used to these fixed enterprise costs and you know we could budget and all this kind of stuff and then there was you know that big hike from Microsoft is absolutely outrage and I spoke to Ben Weinberger who at the time was the head of operations for which whose book I just received if anyone wants to read my mind.
(09:46):
Ben Weinberger the death of big law.
He's told me if you're not reading it yet.
Yes it's called the death of big law.
You know we'll have to all of them we'll have to have this conversation in person at the Lexpo conference in Amsterdam.
(10:14):
We are bringing the book but yeah he said he was like this is no surprise you know you need you need to get whether you need to modernize your thinking in terms of the way that costs are going to spike and the way that you're not going to be control of them.
This is another evolution of that isn't it and having to mature and deal with the fact that you have to budget for things that you can't always control.
(10:36):
Well our next conversation will be live next and it will be in Amsterdam and we will sit side by side and try to do the most energetic introduction we can possibly in and who knows maybe we'll have some guests walk by in our conversation I will I will look forward to that so.
I can't wait I can't wait.
Carol Hill always a privilege thank you so much and thanks of course to our listener we thank you we think so highly of you thank you.
(11:05):
Thanks everyone.
[Music]
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