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Law firm bill tweet sparks heated chargeable hour debate

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‘An industry waiting to be disrupted one day’

A start-up founder has started a passionate debate on Twitter after posting a picture of a law firm bill with some extravagant hourly rates.

There have been hundreds of responses, which broadly take one of two sides in the debate. There are the ‘traditionalists’, who support the hourly rate, versus the ‘legal tech innovators’ who challenge the existence of the hourly rate and seek to promote greater cost efficiencies through an increased reliance on AI.

On the ‘traditionalist’ side of the debate it has been suggested that the “world-class” advice of lawyers cannot be replicated by machines. The complexity of the law and the inability of AI to decipher and solve multi-layered legal issues effectively are frequently cited examples to support this argument.

A notable voice here is, somewhat counterintuitively, that of Jack Sheperd, an ex-Freshfields insolvency lawyer who now works for legal tech company iManage. He seems to suggest that hourly bills may be preferable for clients, who might not trust lawyers to set fixed fees without seeking to benefit by over-charging and under-working. Moreover, he notes that a centralised, automated cost calculator, based on how satisfactory the ‘execution’ of a legal contract is, would never work: “Not all obligations can be determined to be fulfilled upon objective criteria. If they could, we wouldn’t need courts,” he tweets.

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Contrastingly, there have been a flurry of responses which emphasise the need for greater cost efficiencies, via the use of legal tech, as a means of eliminating hourly rates altogether. Noah Waisberg, CEO of another legal tech company, Kira Systems, describes the support for his side of the argument in this Twitter debate as signalling a “hunger for change” in this area.

Steve Stevenson, co-founder of legal tech start-up Rally Legal, also expresses his support for the innovators and suggests that some of the key ways cost efficiencies can be improved are through the better storage of legal data, a standardisation of legal protocols, document automation and increased online collaboration.

This debate is nothing new, having rumbled on in the legal industry for decades. Legal tech has taken some strong steps forward in recent years, with its adoption having only been accelerated by the COVID-19 pandemic, but so far most of the progress has been around the margins. If the innovators came up with a way to replace the billable hour, everything would change.

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