An outsourcing company published their rates for 2025. They were excited to offer a wide range of outsourced services all for very “competitive” hourly rates.
Then AI came along and said “Ha! Not so fast.”
AI is here
AI is coming for your billable hours too. Today, tomorrow, next week or later in the year, you will not escape.
Recent research shows that AI can reduce the work done by human experts by as much as:
- 46% in law,
- 44% in administrative work
- 59% of emails sent by accountants
- 36% of accounting workflows.
Let’s do some math.
Your law firm or consulting firm charges $300 per hour. You expect to bill 37 hours per week. That’s $11,100 per week per lawyer or consultant, or $577,200 per year.
AI comes along and takes away 46% of billable hours.
That’s $265.512 less revenue.
A pretty sizable hit, don’t you think?
High volume, low rates, harder hits
The outsourcing firm bills hundreds of thousands of hours across all its clients. Since they only get clients by offering “competitive” rates (i.e. low rates), if the work done by people is reduced by 44%, pretty soon they are in the red.
But their business model requires high operations expenses. They can’t reduce the red by reducing expenses.
It’s an ugly outlook.
Do you have options?
Before I offer 5 options, let’s take a moment to understand what clients or buyers want most.
Clients want their particular results delivered to them as fast as possible commensurate with quality.
In other words, buyers think the speed of AI is a benefit to them.
If they have confidence that the AI a company is using is well trained and can do the equivalent of the average employee, they are all for it.
You will not persuade a client to pay for more hours.
5 Options to Work with AI and prosper
- Immediately drop your hourly billing pricing model.
Yes, immediately. Not next week or next month or next year but today. Force yourself and your team to design an alternative that focuses on compensation for outcomes, not time. Get the WHAT (IMPACT Based Pricing) on paper, then work to create the HOW. The longer you wait the longer you lose.
- Remove the concept of charging for inputs from your mindset. Time, research, reports, emails, phone calls, meetings, are no longer “resources” you charge for. They are utilities or air. They exist to make your company work and you use them seamlessly as needed.
- Write a list of IMPACTs your firm delivers to clients and circulate it everywhere as often as needed. You can begin with high level ones such as “peace of mind.” Then ask, what does “peace of mind” mean to our clients? Make a deeper list. For some people peace of mind is related to money; for others it’s related to relationships, or legacies, or philanthropy. You know this because clients have told you. Make this language second nature inside and outside the firm.
- Change your discovery calls so the prospect/client describes the life changing differences they are seeking. Ask “What changes would make a difference to you/your firm? In what ways? Are these differences critical to you or more like a nice-to-have?”
Get away from tasks and deliverables and focus on what happens for the client after the work is complete.
- Adopt the practice of offering 3 options rather than just one. I call this the Choice Framework. The choices allow you to a) personalize the options, b) tap into human nature’s autonomy bias, and 3) reduce their decision anxiety.
You MUST Act
AI is not going away nor will it skip your firm or industry. The road to success is with AI, not against it.
I am working with a law firm and a creative design firm right now to take these 5 steps.
They have already committed to never billing for hours again. They’re developing their IMPACT language and their customized Choice Framework. I expect that they’ll equal their revenue past from billable hours within three months.
If you’re facing the AI future on your own and think some support would be valuable, let me know.
Text AI SUPPORT to 703-801-0345.