Goldman, Morgan Stanley, Citi Demand Big Law Fee Cuts Over AI

The banks' demand marks a direct challenge to the economic engine of Big Law, where profits have traditionally been built on armies of junior associates billing by the hour. Citigroup's global head of legal, Adam Meshel, stated the expectation plainly: if AI cuts hours, costs should come down "significantly per transaction". Morgan Stanley's general counsel Eric Grossman called the compensation model "extraordinarily unstable", suggesting the pressure could reshape how top firms generate revenue.

The push comes after a period of soaring legal bills — associate rates at the largest firms have climbed 33% to an average $798 this year, with partner rates up 29% over the same period, according to Persuit data. While nearly half of large law firms surveyed by Citi's law firms group say AI has already affected their pricing, the disruption has so far been limited. Shama Hyder, a professor of practice at the Link School of Business, argues the banks' demands are feasible because firms can compare similar matters based on total hours, staffing, and cost, even if they cannot measure every minute AI saves. The outcome, she suggests, is a battle over who captures the time and money the technology saves — "Using AI to produce the same invoice faster is not going to satisfy clients."