Worth Reading – AI ROI For Law Firms: There’s Not Any
This has been the challenge with AI in a law firm: how do you measure the ROI? Stephen is correct to point this out:
Here is what I meant. If law firms bill by the hour and if AI does what every vendor says it does, its use would, by definition, reduce billable hours. That, in turn, reduces revenue and profit. It means, instead of a return on investment, they are actually taking a loss on investment. Call it the LOI.
https://abovethelaw.com/2026/09/ai-roi-for-law-firms-theres-not-any/
He is also correct that AI in law firm back-office functions can be measured in traditional ways. Used correctly, it should reduce overhead costs, but here’s something you may not know about many firms.
They’re kind of terrible at measuring back-office costs and efficiencies. There are a couple of reasons, in my opinion:
- When staff doesn’t bill hours, the firm doesn’t know what value they add. They measure everything by the billable hour; assistants, IT, Marketing, etc., are just costs. The value is indirect. There isn’t an easy number to assign to that value. So even if AI is introduced, they won’t see an immediate drop in costs.
- AI is also an additional cost.
- Partly because of #2, and because everything is getting more expensive, these back-office costs keep rising every year.
So, even if traditional ROI measurements show increasing efficiencies and lower costs for some administrative functions, they get lost in the firm’s rising overall costs.
Stephen is also right to point out that the industry really hasn’t figured out how to make this work. Clients increasingly want firms to use AI to reduce billable hours; lawyers don’t want to use technology that makes it harder to meet their billable-hour requirements.
This sounds like an impasse. One that will require some innovative thinking and partnership between firms and clients.
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