The use of artificial intelligence (AI) in legal practice is accelerating the automation of how attorneys research, draft documents, and manage cases. AI tools provide big increases in drafting and research efficiency. However, unpredictable, material problems with AI's accuracy make it unreliable for finished legal products. At this stage of the art, a prudent attorney cannot attribute or abdicate legal competence to any AI tool. A competent, qualified human must complete a thorough review of AI-assisted legal work product before it can be considered final.
How can practicing attorneys apply existing ethical rules and principles in billing for AI-assisted legal work? For now, ethical billing of fees for AI-assisted legal work under existing Texas Rules requires much the same analysis as fee billing did before AI entered the picture. Nothing fundamental has changed, just the context of AI's application, which will still require human judgment in each case.
The Texas Bar's Professional Ethics Committee issued Opinion 705 in February 2025, which provided an unusually broad advisory opinion on various potential ethical concerns raised by lawyers' use of generative AI in producing and delivering legal work. The opinion addresses ethical billing of fees, with a specific focus on hourly billing, and without specific reference to the Texas Rules that deal with hourly billing. Attorneys should read the Opinion before using AI.
This article provides a more in-depth analysis of Texas Rule 1.04(b)(1), which focuses on hourly billing.
Ethical Framework for Billing Fees Under Texas Rules
The primary guidance for ethical billing is the State Bar of Texas Disciplinary Rules of Professional Conduct (Texas Rules), specifically Rule 1.04 (Fees).
Texas Rule 1.04(a) forbids illegal and unconscionable fees, saying that "a fee is unconscionable if a competent lawyer could not form a reasonable belief that the fee is reasonable."
Rule 1.04(b) lists several key but non-exclusive factors relevant to determining the reasonableness (and thus the unconscionability) of a fee.
Texas Rule 1.04(b)(1)
Under Texas Rule 1.04(b)(1), the use of AI tools in legal work affects how you do the work, but not how you determine the fee's reasonableness or unconscionability.
How the work is done. Key components of how work is done for a task done with AI assistance are:
- Query formulation (human thinking and request drafting)
- Research and presentation of initial results (machine activity)
- Review of initial results (human reading and thinking)
- "Rinse and repeat" (iterative revision of human queries, machine work and response, human thinking, and machine and human review)
- Final drafting of the opinion, planning a course of action, or other resulting work product (iteration(s) of machine and human editing and review)
- Final human review and approval of work product for use on behalf of the client
Determining reasonableness: The express factors to use, under a Rule 1.04(b)(1) analysis, are: "the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly".
Time and Labor: The lawyer can charge the client only for human time and effort as part of a reasonable fee. Computer "time and effort" was not contemplated when the Texas Rules were adopted. There is no currently accepted reasonable basis for attributing significant machine time and effort to the time and effort billed to a client under Rule 1.04(b)(1).
Novelty and Difficulty of the Questions: The novelty and difficulty factors apply only to the legal question to be answered, not to the work done or its method. How a lawyer solves the client's question, whether by AI tools or not, does not affect how novel or difficult the question is.
Requisite Skill to Perform the Service Properly: The "skill" needed to perform a service properly was meant to be human skill at the time the rules were written. Today, computers and AI tools are ubiquitous and easy to use (or misuse). The skills applied in using AI are fundamentally the same analytical and communication skills required of competent legal practice: ask good questions, evaluate answers, and ask good follow-up questions.
Therefore, the use of AI tools is not a significant factor in judging the reasonableness of a fee under Rule 1.04(b)'s express factors. There may come a time when failure to use AI in order to economize on time spent may be thought to unreasonably inflate a time-based bill. Why? Because the human time spent would not have been required had you used artificial intelligence to economize. I don't see us being there yet, but I do see it in the mists ahead.
My advice is to charge reasonably under a specific Texas Rules analysis, and according to the engagement agreement. Use competence and reasonableness in doing the work and testing the fee, regardless of whether AI tools are used or not, and regardless of whether AI saves time or not. Never rely on AI tools to replace your application of human legal review, thought, and judgment to the final draft of work product.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
