Recently, the American Bar Association (ABA), a major association of lawyers in the United States, published Formal Opinion 512.

The opinion focuses on the ethical use of Generative Artificial Intelligence (GAI) tools by lawyers, particularly regarding the charging of fees to clients. Rule 1.5(a) of the opinion, for instance, addresses the reasonableness of charging for the use of such tools when a lawyer and client agree on a fixed or hourly fee model.

For example, if a lawyer uses a GAI tool that allows them to deliver work more quickly than they would have without it, the ABA, through this opinion, takes the stance that the proposed fee should be adjusted downwards or that the hourly billing model should reflect the actual time spent.

Naturally, this opinion has sparked heated debates. At a time when GAI remains a trending topic, and there is growing concern among legal professionals that many tasks may no longer require human expertise, the ABA’s stance is open to criticism.

Firstly, it is essential to consider the local legal context and culture. It is well known that in the United States, the legal market heavily relies on hourly billing, the well-known time-sheet system. There is even strong resistance to alternative models, such as success-based fees (success fees). Thus, this opinion cannot be applied universally to all jurisdictions, especially those governed by civil law and its nuances.

Secondly, while the ABA’s opinion may be justified from a pragmatic perspective—after all, if a lawyer can complete more work in less time, it would not seem reasonable to charge the same as for a manually performed service, similar to the work of a craftsman—there are important criticisms to be made.

According to Brazilian legal scholars Luciano Benetti Timm and Wilton Gutemberg, this stance is based on an outdated economic theory: the labour theory of value. This theory posits that the monetary value of a product or service is derived from the amount of labour required to produce it.

However, the labour theory of value is characteristic of the thinking of the Industrial Revolution era in the 18th century when products and services had little diversity or differentiation. With the development of capitalism in the following century, consumer choices expanded, making utility a more relevant factor in determining monetary value.

As a result, the time and effort invested in a product or service will only be relevant in pricing if it corresponds to the perceived utility for its recipients. And this utility is a far more complex element than simply quantifying the time spent. Often, a product that took less time and effort to produce may offer greater benefits (in terms of utility) to the client, whether aesthetic, reputational, or otherwise, as Timm and Gutemberg point out.

The legal scholars go further and directly criticise the ABA’s opinion. According to them, the US legal market has shielded itself from these conceptual changes. The billable hour model has survived at least three industrial revolutions—mechanical, electrical, and automation—and remains the dominant pricing model. However, the fourth industrial revolution, with its drastic reduction in task execution time through AI, has hit the services sector hard, exposing the inadequacy of this model.

Furthermore, GAI tools are reshaping billing models in the legal market. On the one hand, services are now performed more quickly and efficiently, reducing the number of billable hours. On the other hand, it is now possible to scale up the volume of contracted services, especially those of lower complexity. At the end of the day, the equation remains positive, reinforcing the idea that technology, productivity, and innovation are the three pillars of survival for any law firm.

Finally, from a third perspective, things need to be put into context. The “more for less” concept, advocated by British legal scholar Richard Susskind a decade ago, suggests that legal professionals should adopt more rigorous cost controls and seek greater efficiency in performing their tasks. One of the strategies suggested is precisely the use of GAI tools for routine activities, such as reviewing legal documents, due diligence processes, contract drafting, and legal research.

Thus, the “more” refers to providing legal services with greater quality, while the “less” relates to efficiency and cost reduction, as work is completed faster and with fewer professionals involved. There is, therefore, no direct connection between the ABA’s opinion and Susskind’s concept. In other words, the emergence of GAI tools does not necessarily equate to a reduction in legal service costs.

After all, the old parable of the screw is more relevant than ever. It is said that a technician was once hired to fix a sophisticated and valuable piece of equipment. He tightened just one screw among hundreds, saving the machinery from major damage. When questioned about the simplicity of the task and why he charged one euro for tightening a screw and a thousand euros for knowing which screw to tighten, his answer could not have been more fitting—especially in response to the American Bar Association:

“You are paid for what you know, not just for what you do.”