Billing for AI Work

Billing for AI-assisted work is one of the most state-divergent areas in the attorney-AI rule set. The question is not whether AI-assisted work can be billed, but how the time AI saves, and the cost of the tools, should be reflected in the fee. ABA Formal Opinion 512 (July 29, 2024) applies Model Rule 1.5: lawyers who bill hourly “must bill for their actual time,” the Rule 1.5(a) factors “also apply when evaluating the reasonableness of charges for GAI tools when the lawyer and client agree on a flat or contingent fee.” For flat fees in particular, “it may be unreasonable under Rule 1.5 for the lawyer to charge the same flat fee when using the GAI tool as when not using it.” North Carolina 2024 Formal Ethics Opinion 1 takes the same position on hourly billing; its treatment of AI costs differs, as described below.

Virginia takes a different view of non-hourly fees. Virginia State Bar Legal Ethics Opinion 1901 (Reasonable Fees and the Use of Generative Artificial Intelligence), approved by the Supreme Court of Virginia on November 24, 2025, agrees that time-based billing “can only be based on the actual time spent on a task,” but concludes that “[i]t is not per se unreasonable for a lawyer to charge the same non-hourly fee for work done with the assistance of AI as work done without the use of AI.” Where AI substantially reduces the time spent, it adds that “the client may need additional explanation” of the basis for the fee under Rule 1.5(b). The opinion does not cite ABA Op 512. The state tracker records LEO 1901 in full.

Tool costs are where North Carolina varies. Under ABA Op 512, a tool that “functions similarly to equipping and maintaining a legal practice” is overhead, and the lawyer should “not charge the client for its cost absent a contrary disclosure to the client in advance”; by contrast, the actual out-of-pocket cost of a third-party GAI service used for a particular client and charged per use may ordinarily be billed as an expense. LEO 1901 does not address expenses. North Carolina’s 2024 FEO 1 permits a lawyer to charge AI expenses, either as costs specifically tied to the matter or through a general administrative fee covering general technology-related expenses, including AI, provided the charge is “accurate, not clearly excessive, and the client consents to the charge, preferably in writing.” Firms in other states may wish to confirm the treatment against their own state’s guidance or with counsel in their jurisdiction. The informed-consent form and client AI-use notice templates can help document that consent.

For managing partners, firms may wish to adopt two record-keeping habits regardless of state. A contemporaneous time entry for each billable AI workflow that names the verification work supports hourly billing. A record of client consent for each passed-through AI cost supports expense billing; North Carolina prefers, but does not require, that the consent be in writing, and a written record is the easier one to produce later. The audit-report and usage-log templates produce those records. Virginia’s flexibility on non-hourly fees under LEO 1901 carries its own documentation point: the basis for the fee must be adequately explained to the client.