Aipedia: Solicitors and law firms

AI time recording and billing in law firms

Aipedia, by the Apex broking team · Last reviewed 2026-10-27

AI can capture time and draft bill narratives, but solicitors must not mislead clients about the work done or what it cost. Billing problems are mainly regulatory and commercial risks, and fee disputes and overcharging findings usually fall outside PI cover.

Part of: AI in solicitors and law firms

In short

Firms use AI to reconstruct time from emails and documents, draft narratives and analyse matter profitability. The risks are inflated or invented time entries, narratives describing work that AI did as if a fee earner did it, and charging hourly rates for time AI has largely saved. Code 1.4 forbids misleading clients, and Code 8.7 requires the best possible information about pricing. A regulatory finding of overcharging or a dispute over fees is usually not a claim PI responds to, so the controls sit in billing processes rather than insurance.

How firms use AI in time and billing

AI tools now suggest time entries by tracking emails, calls and document activity, turn rough notes into polished bill narratives, flag write-offs, and analyse which matters are profitable. Some firms use AI to build fixed or value-based prices. At the same time, AI drafting and review mean some tasks take much less fee earner time than before, which raises the question of how they should be charged.

The duties that apply

Code 1.4 of the SRA Code of Conduct prohibits misleading clients, and the SRA's warning notice lists it among the duties engaged by AI misuse. Principles 2 (public trust), 4 (honesty) and 5 (integrity) apply to billing. Code 8.7 requires solicitors to ensure clients receive the best possible information about how their matter will be priced and about the likely overall cost, both at engagement and as the matter progresses.

The Law Society recommends agreeing with clients whether and how AI is used on their matter, which naturally extends to how AI-assisted work is charged.

Overcharging and misleading bills

The main ways AI billing goes wrong are:

Inflated reconstruction. An AI tool estimates time from activity and the estimate is accepted without checking.
Misleading narratives. A narrative says "considered and reviewed" when a tool did the work in seconds.
Charging saved time. A task that now takes 20 minutes is billed at the old hourly allowance.
Inconsistent estimates. AI-assisted pricing that does not match what the client was told.

There is no SRA rule that efficiency savings must be passed on, but charging for time not spent, or describing work in a way that misleads, raises Code 1.4 and integrity concerns. Firms should decide openly how AI-assisted work is priced and explain it. Fixed fees, capped fees or a clear technology charge can be easier to justify than hourly entries for tasks a tool now performs, provided the client understands the basis before work starts.

What can go wrong

Illustrative: a firm introduces an AI time capture tool. Fee earners accept its suggested entries in bulk. A client challenges a bill and finds entries for reviewing documents that were in fact processed by an AI tool in minutes, described in the narrative as hours of detailed review. The client seeks an assessment of the bill and complains to the SRA, which investigates the firm's billing controls.

Why fee disputes usually sit outside PI

PI under the SRA minimum terms responds to civil liability claims for loss caused by the firm's legal work. A dispute over the amount of a bill, a reduction on assessment, or a requirement to refund overcharged fees is usually not that kind of loss, so it is commonly not covered, depending on the wording. Fines and penalties are a permitted exclusion, so an SRA sanction for misleading billing is usually uninsured, and dishonesty is also a permitted exclusion. See fines and penalties under PI and the SRA MTC permitted exclusions.

Practical controls

Require fee earners to check every AI-suggested time entry individually.
Write narratives that describe AI-assisted work accurately.
Set a firm policy on how AI-assisted tasks are priced and explain it in client care letters.
Audit a sample of bills for AI-generated entries.
Update estimates when AI changes the likely cost.

How Apex helps

Apex arranges PI for solicitors and law firms. A broker can explain what your policy does and does not cover, including fee-related exposures. See the AI in law firms hub, Does solicitors' PI cover AI mistakes? and SRA AI warning notice explained.

Sources

Frequently asked

Do we have to pass AI efficiency savings on to clients?

There is no SRA rule requiring it. But you must not mislead clients about work done (Code 1.4), and you must give the best possible information about pricing (Code 8.7). Charging hours that were not spent risks integrity concerns.

Can we use AI to reconstruct time entries?

You can use AI to suggest entries, but a fee earner should check each one. Accepting estimated entries in bulk risks billing for time not worked, which can mislead the client and raise conduct concerns.

Does PI cover a refund of overcharged fees?

Usually not. PI responds to civil liability for loss caused by legal work, and a refund or reduction of fees is not normally that kind of loss. Regulatory fines are a permitted exclusion. The exact position depends on the policy wording.

Should bill narratives mention AI?

There is no rule requiring it, but narratives must not mislead. If AI did most of a task, describe the work accurately rather than implying hours of manual review. Explaining your approach to AI-assisted work in the client care letter avoids surprises later.

Check your PI covers how you use AI

Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.