Legal costs · 21 September 2026
The regulators have answered the question most clients are too polite to ask. If artificial intelligence did the drafting, the bill has to say so, and it cannot be higher than the old way.
Here is the short answer, because you deserve one before the lawyers start hedging.
If artificial intelligence made your legal work faster, your bill should reflect the time and work actually done, not the time it would have taken a person in 2019. That is not a consumer advocate's wish. It is what three Australian legal regulators put in writing in December 2024, and what the Supreme Courts of New South Wales and Victoria have since backed with practice notes that carry real consequences.
Most clients have never been told any of this. This article fixes that.
Everything below explains where those five lines come from, and what to do with them.
On 6 December 2024 the Law Society of New South Wales, the Legal Practice Board of Western Australia and the Victorian Legal Services Board and Commissioner published a joint Statement on the use of artificial intelligence in Australian legal practice. It is short, it is public, and it is blunt about money.
On billing, the statement requires lawyers to ensure that "the time and work items they bill clients for accurately represent the legal work done by law practice staff". It goes further: "Lawyers using AI should ensure that it does not unnecessarily increase costs for their client above traditional methods."
On transparency, lawyers are expected to be "properly recording and disclosing to their clients" both "when and how they have used AI in a matter and how the use of AI is reflected in costs".
On accuracy, the position is unambiguous. Lawyers who use AI to prepare documents "must be able and qualified to personally verify the information they contain, and must actually ensure that their contents are accurate".
Read those three passages together and a picture forms. A lawyer cannot let a machine draft a document in four minutes, bill the client for the two hours a junior would once have spent, and stay silent about how the work was done. That is not a grey area. It is the thing the regulators wrote a statement to prevent.
Most Australian law firms still bill in six-minute units. A letter that takes eleven minutes becomes two units. A day of document review becomes eighty.
Time billing made a rough kind of sense when time was the scarce input. Generative AI breaks that link. A first draft of a contract clause, a chronology, a letter of demand or a summary of a 200-page bundle now takes a fraction of the time it took in 2022. The value to the client may be identical. The time is not.
That leaves firms with three honest options and one dishonest one.
The honest options are to bill the reduced time, to move to a fixed fee that reflects value rather than minutes, or to disclose the AI use and agree a price with the client up front. The dishonest option is to keep billing the old time and hope nobody asks.
The regulators' statement was written for the fourth option. It closes it.
Cost is one half of the story. The other half is what happens when AI gets the law wrong and nobody checks.
The Supreme Court of New South Wales issued Practice Note SC Gen 23 on 28 January 2025, commencing on 3 February 2025 and applying to all proceedings from that date. It bans generative AI from being used to generate the content of affidavits, witness statements, character references and similar evidence. Where AI is used to help prepare submissions, the author must verify in the body of the submissions that every citation and reference "exist", is "accurate" and is "relevant". Crucially, "such verification must not be solely carried out by using a Gen AI tool or program", and the use of AI "does not qualify or absolve the author(s) of any professional or ethical obligations to the Court".
Victoria followed on 14 May 2026 with Practice Note SC GEN 25. Lawyers "must exercise oversight and verify the accuracy and suitability of the information provided by any AI system". They must "verify that any references to case law, legislation, textbooks or articles exist and stand for the legal positions attributed to them", and the court spells out that "it is not sufficient verification to ask an AI tool to confirm that the materials exist". Reliance on unverified AI output in court documents may result in referral to the Victorian Legal Services Board and personal costs orders against the lawyer.
The Federal Court has its own practice note on generative AI. Australian courts have already dealt with lawyers filing lists of authorities that did not exist, and regulators have taken action against practitioners as a result. The message from the bench is consistent: the machine can draft, but a human is accountable, and the client should never be the one paying to fix a hallucination.
In New South Wales, Victoria and Western Australia the Legal Profession Uniform Law governs legal costs. Its central rule is that a law practice must charge costs that are no more than fair and reasonable in all the circumstances, and that are proportionately and reasonably incurred and proportionate and reasonable in amount.
The Uniform Law also requires law practices to disclose the basis on which costs will be calculated and an estimate of total costs, and to update that disclosure when things change. If you receive a lump sum bill, you can generally request an itemised bill within 30 days.
Put AI into that framework and the logic is simple. If a task that used to take two hours now takes twenty minutes, then two hours is no longer "reasonably incurred". The technology did not change the law. It changed what reasonable looks like.
Other states and territories have their own legal profession legislation with similar fairness and disclosure requirements, and their own cost dispute processes.
None of those questions is rude. Each of them tracks something the regulators have said a lawyer should already be recording and disclosing. A firm that bristles at the first question is telling you something.
Firms that adopt AI well are already doing the same work in less time, at lower cost, with fewer errors than a tired graduate at 11pm. That is good for clients and good for the firms that pass the benefit on.
The tension is that the billable hour rewards the opposite behaviour. Every minute saved is a unit not billed. The regulators have now said, in effect, that this is the firm's problem to solve and not the client's problem to fund.
Expect two things over the next two years. More fixed-fee and scoped pricing, especially in family law, conveyancing, wills and small business work where the tasks are predictable. And more cost disputes where the client's first question is not "why so much?" but "how long did this really take?"
The second question is the one AI has made unanswerable in the old way, and the one every bill will eventually have to answer.
Australian regulators say the time and work items billed must accurately represent the legal work actually done, and that AI use should not unnecessarily increase costs above traditional methods. If AI reduced the time spent, a time-based bill should reflect the reduced time. A fixed fee agreed in advance is a different question, because you agreed to pay for the outcome rather than the hours.
The December 2024 joint statement by the Law Society of New South Wales, the Legal Practice Board of Western Australia and the Victorian Legal Services Board and Commissioner says lawyers should be properly recording and disclosing to clients when and how they have used AI in a matter and how that use is reflected in costs. Courts in New South Wales and Victoria also require disclosure and verification when AI has been used to prepare certain court documents.
The lawyer. Regulators require lawyers to be able and qualified to personally verify AI-prepared documents and to ensure their contents are accurate. Court practice notes in New South Wales and Victoria say verification cannot be done by simply asking another AI tool, and that reliance on unverified output can lead to referral to the regulator and personal costs orders.
In New South Wales, Victoria and Western Australia, a client who receives a lump sum bill can generally request an itemised bill within 30 days. An itemised bill shows the tasks and time claimed, which is where AI-compressed work becomes visible.
The Supreme Court of New South Wales Practice Note SC Gen 23, in force from 3 February 2025, bans generative AI from generating the content of affidavits, witness statements and character references and requires verification of every citation in AI-assisted submissions. The Supreme Court of Victoria Practice Note SC GEN 25, from 14 May 2026, requires lawyers to verify that every reference exists and supports the proposition attributed to it. The Federal Court has a separate practice note on generative AI.
In Victoria, the Victorian Legal Services Board and Commissioner handles costs disputes within published time limits and monetary tiers, and the Costs Court of the Supreme Court can review costs. New South Wales has a costs assessment scheme run through the Supreme Court. Other states have their own legal services commissioners and assessment processes. Act quickly, because the time limits are short.