An interactive exploration of how artificial intelligence is reshaping the economics of legal work—and which practice areas face the most pressure.
When AI reduces the time needed to complete legal work, what happens to demand for lawyers? The answer depends on a concept economists call price elasticity of demand—how much the quantity of legal services demanded changes when prices change.
When clients must have legal help regardless of price—bet-the-company litigation, criminal defense, regulatory investigations. Price drops don't dramatically increase volume; they increase lawyer margins.
When clients are price-sensitive and have alternatives—routine contracts, basic formations, DIY-able documents. Lower prices can dramatically increase the volume of matters tackled.
AI doesn't affect all legal work equally. It crushes tasks that are standardized and text-heavy, while amplifying lawyers' capacity for judgment and strategy.
Explore how AI might affect your practice economics. Adjust the inputs below to see how changes in automation, pricing strategy, and client sensitivity interact.
| Metric | Before AI | After AI |
|---|---|---|
| Price per matter | $1,000 | $790 |
| Matters per year | 50 | 71 |
| Hours per matter | 3 | 1.74 |
| Total hours per year | 150 | 124 |
| Hours freed up | — | 26 hrs |
In this scenario, AI lets you earn more while working fewer total hours. Because your clients are price-sensitive (high elasticity), even a modest price cut produces a significant increase in volume. The sweet spot is sharing some AI savings with clients to capture more of the expanding market.
Not all legal work responds the same way to AI disruption. Practice areas vary dramatically in their price elasticity and automability—and that determines who feels pressure first.
Routine, standardized work where clients have many alternatives—including AI itself.
Pattern-based but with meaningful stakes. Clients want quality but watch costs closely.
Judgment-intensive work where stakes are high and substitutes are few. AI amplifies capacity.
Massive unmet need held back by cost. AI can unlock entirely new markets.
Studies show AI assistance helps weaker performers more than strong ones. The value shifts from technical drafting ability to judgment, strategy, and client skills. (Choi, Monahan & Schwarcz, 2023)
Alternative Legal Service Providers grew to $28.5B by 2023, driven by cost-sensitive work. This is revealed preference evidence that much legal demand is highly price-elastic. (Thomson Reuters)
Large firms raised rates 8%+ in 2023 while demand held. For high-stakes work, short-run elasticity is low—but pressure on the billable hour model is building. (Citi-Hildebrandt)
Whether you're looking to productize routine work, leverage AI for complex matters, or navigate the changing economics of legal services, I can help.
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