The question comes up the week a firm signs for an AI tool. Someone asks whether the cost goes on the client's bill, in the engagement letter, or nowhere. The answer depends on how the tool is priced, because the opinion treats a charge you can trace to one matter differently from a cost you carry for the whole office. This page walks through each pricing model and how it lines up with the billing rules.
What does ABA Opinion 512 say about billing for AI tools?
Formal Opinion 512, issued by the ABA in July 2024, applies Model Rule 1.5 on fees to generative AI. Three points matter for a buyer. A fee must stay reasonable, so you cannot charge more than the work is worth because a tool was involved. An hourly lawyer bills the hours actually worked, so a task that took ten minutes with AI is a ten minute entry, not the three hours it used to take. And costs follow the usual expense rules: a per use charge for a particular client matter can ordinarily be billed at actual cost, while general overhead belongs in your rates.
The opinion also expects you to tell the client how the tool is used and charged, usually in the engagement letter, before the first bill. Your state bar may add its own gloss, so treat the opinion as the floor and check local guidance before you rely on it.
Which AI pricing models can be passed through to a client?
| Pricing model | Example | Usual treatment | What to document |
|---|---|---|---|
| Per package or per case charge | ApexDemands prints $250 per demand package | A cost tied to one matter, so it can ordinarily be billed at actual cost with disclosure | The invoice or receipt, and the engagement letter language |
| Per user or flat firm subscription | CaseAgent plans from $149 a month for the firm | Serves every matter, so generally overhead priced into your rates | Nothing to itemize, but say in the engagement letter that AI tools are used |
| Per case inside an annual contract | EvenUp and Supio sell per case on private order forms | The per case rate may be traceable to a matter, but a minimum commitment is a fixed cost either way | The order form, and how you allocate unused volume |
| Metered usage or credits | Research tools billed per query or per document | Billable at actual cost only where usage is recorded against the matter | Usage logs by matter number |
This is a reading of the opinion, not legal advice for your state. The practical pattern is the same everywhere. If you want to itemize, you need a number tied to a matter and a client who agreed in writing. If you do not, price the tool into your rates and keep the engagement letter honest about using it.
Can I bill the hours AI saved me?
No. This is the part of the opinion that changes how firms sell their work. Billing a client for three hours when the tool produced the draft in twenty minutes is billing for time not worked. Firms that want to capture the gain have two honest routes. They can move the matter to a flat or contingent fee, where speed raises the margin and the client is not paying per hour. Or they can keep hourly billing, accept lower hours per matter, and use the freed capacity to take on more matters.
Personal injury work is already contingent, so the gain lands in margin automatically. A drafted demand is a cost of the case, and the question is simply whether a flat plan or a per package service costs less at your volume. The worksheet on our demand letter software page runs that arithmetic with your own demand count, hand drafting hours and staff cost.
What should the engagement letter say about AI tools?
Keep it short and specific. Name the kind of tool (a drafting assistant that works from the case file, a research tool), say that every output is reviewed by a licensed attorney before it is used, say whether any AI cost is charged to the client and how, and say that client information is not used to train public models. Then check that the vendor's terms back up that last sentence.
While you are rewriting the template, it is a good moment to look at how the firm tracks versions and renewals of its engagement letters. A contract management tool is what teams usually reach for once the template count passes a handful, though a solo practice can live with a shared folder.
Does the flat fee plan avoid the problem?
Mostly. A subscription that covers every matter in the office does not appear on any client invoice, so there is no pass-through to explain. You still owe the same disclosure, and your hourly entries still have to reflect real time. What the flat plan gives you is predictability: the cost does not rise with each demand, each chronology or each research run, and it does not create a line your client can question.
That is how CaseAgent is priced. The agent reads the pleadings, records and correspondence in each matter and drafts demands, chronologies and deadline timelines for attorney review, under one monthly fee per firm. Each plan includes a set number of agent runs, shown on the pricing page. Nothing is sent or filed without an attorney approving it, which is also what the competence duty in the opinion expects of you.
A worked example for a personal injury firm
Take a firm that sends twelve demands a month. A $250 per package service costs $3,000 a month, or $36,000 a year, and each charge is traceable to one client. Under the opinion the firm could pass it through at actual cost, but on a contingency file the fee agreement usually decides who bears case costs, and many firms advance them and recover them from the settlement. That is a real line on the disbursement ledger for every case.
The same twelve demands on a flat plan cost the firm one monthly fee that does not change with volume, and no client ledger carries it. The trade is that your team reviews and finishes the draft instead of receiving a finished package, so the question is whether twelve reviews take less of your staff's month than the $3,000 you would otherwise spend. That answer is specific to your people, which is why the worksheet takes your own hours and rates and does not assume them.
What should you ask a vendor before you sign?
Ask four things in writing. Is the charge per matter, per user or per firm, so you know which bucket it falls into. What is the renewal term and the notice period, since an annual commitment is a fixed cost regardless of your caseload. Does the vendor give you a usage record by matter, in case a client or an auditor asks. And what happens to your files and the drafts if you cancel. Vendors that cannot answer these before the sale will not answer them after it.
The short version
Bill hours worked, never hours saved. Pass a per matter AI charge through at actual cost only if the client agreed in writing. Treat a firm wide subscription as overhead. Put one honest paragraph about AI tools in the engagement letter. If you are choosing between a per package service and a flat plan, price both against your real demand volume on the demand letter software comparison before you sign anything.
A flat fee that does not show up on a client invoice
CaseAgent drafts demands, chronologies and deadline timelines from the case file for one flat monthly fee per firm, from $149 a month. Every draft waits for attorney approval.