Is Generative AI Reshaping Legal Pricing Strategy?

Is Generative AI Reshaping Legal Pricing Strategy?

According to Mark Medice, Principal at Law Vision, the question of whether generative AI will bring down legal rates has become increasingly common. Yet, as Medice highlighted recent insights from Law.com and the Thomson Reuters 2025 Generative AI in Professional Services Report, most legal professionals don’t believe rates will materially change. This may reflect a deeper truth: the real impact of AI on legal pricing strategy won’t come from slashing rates, but from redefining how firms understand, deliver, and price legal value.

Legal rates are not set by technology but by the marketplace. Factors such as client expectations, perceived value, competitive positioning, and macroeconomic conditions all exert greater influence than whether a memo was drafted by a junior associate or a generative AI tool.

The article says that most firms have not seen material productivity gains from AI, but that is expected to shift in 2025 as firms move from experimentation to execution. The increasing adoption of alternative fee arrangements (AFAs) signals a deeper transformation, with firms beginning to explore more nuanced pricing models such as outcome-based fees and AI-enabled service tiers.

For managing partners, legal pricing strategy is no longer just an operational concern. Firms that understand how to leverage AI to differentiate and deliver value will be better equipped to weather economic volatility and strengthen client relationships. AI won’t lower rates, but it can help law firms price smarter, more transparently, and with greater alignment to the evolving market.