The billable hour is under pressure: How pricing and talent are reshaping the business of law – sa.global

Series note: This post continues a thought-leadership series I began last year, reflecting on what I keep hearing in conversations with leaders across UK law firms. The series started with six hard truths shaping the market. So far, I’ve explored why firms must prove AI value in measurable business terms, and why data and cybersecurity have become deal breakers rather than background concerns.

This piece brings together the third and fourth truths, because in practice they are inseparable: pricing models are under pressure, and talent expectations have changed for good.

Treating pricing models and talent expectations as separate challenges misses the point. They are connected by a deeper issue that many firms are still reluctant to confront: how well they truly understand the economics of their business.

Why this conversation keeps returning to billable hours

In almost every discussion with managing partners, COOs and finance leaders, the billable hour makes an appearance. Not because firms want to abandon it, but because they are increasingly aware of its limits.

Clients are asking for predictability and value, not just transparency. AI and automation are compressing effort in certain areas and accelerating delivery timelines. That combination exposes a simple reality: the billable hour can no longer absorb inefficiency in the way it once did.

This does not make the billable hour obsolete. But it does make it exposed.

The uncomfortable truth about pricing

What strikes me most is that firms are not resisting alternative pricing models. They are resisting pricing without confidence.

Fixed fees and outcome-based arrangements are gaining ground, but only where leaders feel they understand scope, delivery and cost-to-serve. Where that confidence is missing, firms retreat to time-based billing, not because it is always right, but because it feels safer.

Here’s the challenger thought that often lands hardest in these conversations:

The billable hour hasn’t failed firms; it has protected them from having to fully understand their own economics.

For years, variability could be absorbed into hours. AI reduces that margin for error. Inefficiencies that were once hidden now show up directly in write-offs, margin erosion, and difficult pricing conversations.

When pricing pressure becomes a leadership issue

Pricing problems rarely start with pricing. They start with visibility.

Inconsistent time capture, late WIP reviews, and reactive write-offs all point to the same issue: leaders are being asked to make commercial decisions without reliable data. That makes pricing feel risky and reinforces conservative behaviour.

AI intensifies this effect. It doesn’t just make work faster; it removes the buffers that once masked weak discipline. Firms that lack a clear view of delivery economics feel this pressure first, and most acutely.

Where talent expectations enter the picture

Talent is often framed as a cultural or generational challenge. In reality, it is deeply economic.

Digital-native lawyers judge firms by how work gets done. Friction in systems, unclear expectations, and last-minute billing pressure are not abstract frustrations; they shape engagement, performance, and retention.

When a firm lacks pricing confidence, that uncertainty flows downwards. Lawyers absorb it through unpredictable workloads, manual admin, and difficult billing conversations. Over time, that erodes trust and motivation.

The firms responding best are not abandoning traditional career paths, but they are broadening them. They are investing in roles and capabilities that strengthen the business of law, such as legal operations, pricing, and client service, because these roles improve both margin and sustainability.

The shared foundation firms can’t avoid

Whether the goal is pricing flexibility or a more sustainable talent model, the foundation is the same: economic visibility.

Leaders need to see, in near real time:

• How work is actually delivered
• Where margin is lost before billing
• Which matters are predictable, and which are not
• How pricing decisions play out over time

This isn’t about producing more reports. It’s about giving leadership the ability to answer questions that matter:

• Which work should we price differently?
• Where do we consistently give value away?
• Which teams are under pressure and why?

Modern cloud platforms make this achievable when operational data is unified rather than fragmented. Running core processes on the Microsoft Industry Cloud for Law Firms offering from sa.global enables firms to connect time, WIP, billing and profitability without increasing administrative burden. In practice, solutions like evergreen from this integrated offering, help firms bring these signals together so leaders can act with evidence rather than instinct.

What progress looks like in practice

Firms that make progress tend to reach a similar place within a year:

• Pricing decisions are supported by data, not debate
• Write-offs become exceptions rather than expectations
• Lawyers spend less time on low-value admin
• The firm gains genuine optionality in how it prices work

The billable hour remains part of the mix. It simply sits alongside other models, used deliberately rather than by default.

A final thought, and an open invitation

In my conversations with law firm leaders, I often see the same tension. Firms want innovation but worry about risk. They want to support their people but protect margin. They want pricing flexibility but fear getting it wrong.

The firms that move forward are the ones that stop treating pricing, talent, and technology as separate conversations. They recognize that all three are symptoms of the same underlying question: do we truly understand how our firm makes money?

In future posts, I’ll explore other themes surfacing in recent discussions with law firm leaders. In the meantime, if these reflections resonate and you’d like to exchange notes, I’d welcome the conversation.

Feel free to reach out or connect with me on LinkedIn; sometimes the most useful insights come from comparing experiences.