AI suits are here

Economic Times

2 days ago

ETtech Top legal firms leaning on GenAI tools are cautiously ushering in a radical reform of the profession as they wean away the traditional practice of billing clients by the hour to value delivered services. The legal sector, generally considered slow to adapt, is now actively experimenting with AI. While concerns around confidentiality, billing model, and hallucination persist, Indian law firms are mapping a careful path. This combination of human judgment and machine intelligence could reshape the economics and efficiency of legal practice, provided clients are willing to evolve with it. The transformation is not immediate. However, the growing role of AI in routine legal tasks such as contract drafting, document summarisation, and due diligence is beginning to challenge the very foundation of time-based billing.
Partner of Mumbai-headquartered law firm Trilegal Nishant Parikh is seeing tangible improvements in due diligence tasks by using tools like Lucio. 'We follow a mix of hourly and flat-fee rates,' he said. 'Clients want faster results but aren't always willing to pay more. The market is still anchored to time spent. But ideally, I'd want value-based billing to become the norm.'
Some firms are going further. Khaitan & Co. has developed its own AI platform, KAI (Khaitan & Co. AI), with tools like ask.KAI and KAI.query for internal research, drafting, and workflow automation. 'Faster analysis and automated document parsing are already showing results,' said Haigreve Khaitan, senior partner. 'But it's still early to attribute billing changes solely to AI. We remain flexible in our structures, but our current billing still depends on complexity, practice area, and client needs.'Firms are clear on their stand that 'AI is an assistant and not a replacement'. 'The 'lawyer in the loop' model is fundamental,' Khaitan emphasised. Kartik Ganpathy, founding partner at IndusLaw, also believes AI brings efficiency but not necessarily savings, at least not yet. 'The technology comes at a cost. Clients expect us to deliver faster, but they're not willing to pay more. We're not seeing profit margins increase yet, but maybe in 4-5 years,' that may change.IndusLaw allows only experienced lawyers to use GenAI tools, citing prompt quality as a key factor. 'You need at least 2-3 years' experience to get the best results from these tools,' he said. 'About 50-60% of larger firms already use GenAI tools, at least to some extent. 'These tools have been tested thoroughly,' according to Parag Srivastava, partner at Bombay Law Chambers. While BLC is still in the early stages of GenAI adoption, the firm recognises the potential. 'Due diligence has been streamlined massively. But billing models are still hybrid, a mix of hourly, flat, and blended fees. We'll only see a shift to value-based billing if clients see measurable gains.' ButAI hasn't yet moved the needle significantly on profitability. 'We don't make much on diligence work,' Parikh admitted. 'Margins are still very, very low.' Finally, client-side adoption will be the real game changer. 'Right now, there's fixed pricing for some GenAI-driven tasks, which makes sense. But once clients start associating AI with better outcomes, not just faster ones, we'll see serious movement toward value-based billing,' said Vasu Aggarwal, cofounder, Lucio, a widely adopted GenAI legal platform. 'The next 12 months are crucial. The Indian market is way ahead of its Western counterparts in GenAI adoption. If that momentum continues, pricing based on value delivered might become a competitive necessity,' added Aggarwal. 'Lucio is a horizontal legal AI platform but adapts vertically to specific needs,' said Aggarwal. 'The most prominent use cases are drafting and due diligence.' GenAI tools like Lucio can cut task time by up to 90% or 20% depending on the type of task. 'If drafting took 75 minutes before, it now takes 15. Summarising a document that took 40 minutes can be done in 10.'While AI hasn't been transformational yet, it's rapidly gaining traction, including in Tier-2 and Tier-3 cities.'Adoption will take its natural course,' said Aggarwal. 'Once that happens, the shift toward value-based billing will follow. Right now, there's no uniform model, but the mindset is changing.' Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. As 50% US tariff looms, 6 key steps that can safeguard Indian economy
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