Harvey co-founder says AI will push law firms toward fixed fees

In short: A founder of legal AI company Harvey says AI will force law firms to change how they charge clients, moving more work away from hourly billing.

What's going on

Winston Weinberg, co-founder and chief executive of Harvey, told the Financial Times that AI tools can now handle more of the routine work junior lawyers often do. That includes tasks like searching past cases, summarizing documents, and drafting first versions of text.

Weinberg said this will put pressure on the traditional “billable hour” model, where clients pay for each hour a lawyer works. If a company’s in-house legal team can use AI to do a task quickly, it will be less willing to pay a law firm for many hours of similar work. He expects more legal work to be priced as fixed fees, like paying a set price for due diligence (checking a large set of documents before a deal), rather than paying by the hour.

He also described how Harvey aims to compete by building AI “agents,” meaning software that can carry out steps in a process with human review. Think of it like an assistant who can prepare a full first draft, but still needs a lawyer to check it and decide what to do.

Harvey was founded in 2022 and has reached an $11bn valuation, according to the interview. The company builds tools on top of large AI models from firms such as OpenAI.

What to watch

The big question is how fast law firms and their clients change contracts and pricing. Another issue is trust, since legal work often needs careful checking, and mistakes can be costly.

Source: Financial Times