After the ABA's 2024 AI Guidance, Here Is What NJ Small Firms Still Need to Figure Out on Their Own

In July 2024, the ABA Standing Committee on Ethics and Professional Responsibility released Formal Opinion 512, its first substantial guidance on how attorneys should bill for work assisted by AI. The opinion got a good amount of coverage. LinkedIn posts called it a "must-read." A few bar association newsletters summarized it. And then most solo and small-firm attorneys in New Jersey filed it away mentally and kept doing exactly what they were doing before.

That's understandable. A busy family law solo in Bergen County isn't running a billing compliance audit every time she uses an AI tool to draft a motion. But Opinion 512 raises questions that NJ practitioners haven't fully worked through, and the answers aren't as comfortable as the coverage made them sound.

What Opinion 512 Actually Says

The opinion addresses two scenarios most attorneys are already living: using AI to do work faster, and passing the cost of AI tools on to clients.

On efficiency, the ABA confirmed what most of us suspected but hadn't wanted to commit to in writing. If an AI tool cuts a four-hour research task down to forty-five minutes, you can't bill the four hours you would have spent without AI. You bill for the time you actually spent, plus whatever reasonable supervisory and review time was genuinely required. This isn't about charity to clients. It's what RPC 1.5 has always required: fees must be reasonable.

On costs, the opinion draws a line between overhead and pass-through expenses. A general-purpose AI subscription you use across all your matters is overhead, similar to your Westlaw flat-rate or your office internet. You can't itemize that on client invoices unless your engagement agreement explicitly authorizes it. A per-query or per-matter AI cost is closer to a reimbursable expense, but again, only with client consent.

None of this is shocking. What's worth noting is how many small-firm billing practices are quietly inconsistent with it.

Where New Jersey Creates Its Own Wrinkle

New Jersey's RPC 1.5 tracks the ABA Model Rule closely, but NJ practitioners also operate under the oversight of the Office of Attorney Ethics and a disciplinary infrastructure that takes fee disputes seriously. NJ fee arbitration is available to clients in most civil matters, and the fee arbitration program handles a significant volume of disputes annually.

That matters because a client who feels overcharged can trigger a process that requires you to justify every line item. If your bills reflect pre-AI time estimates on tasks you're now completing in a fraction of the time, you have a documentation problem. And if you've been adding a flat "AI research tools" surcharge without a written fee agreement that authorizes it, you have a consent problem.

Neither of those is fatal on its own. But together, in front of an arbitration panel or a grievance committee, they're uncomfortable.

The Part No One Talks About: What Does "Supervision" Cost?

Here's a billing question Opinion 512 doesn't fully answer, and that NJ attorneys are going to have to work out themselves: how do you bill for AI supervision time?

When you use an AI tool to draft a brief section and spend thirty minutes verifying citations, checking for hallucinations, and revising the output, that thirty minutes is legitimate attorney time. It's professional judgment applied to a work product. It should appear on the invoice.

The problem is that most billing software doesn't have a clean category for it. Attorneys either fold it into "drafting" (accurate enough) or skip it entirely because it feels awkward to bill for reviewing AI output. That reluctance is costing small firms real money while also muddying the record of what the work actually involved.

The practical fix is to add a matter-level time entry description standard to your billing workflow. Something like "Review and revision of AI-assisted draft, motion to dismiss" is honest, clear, and defensible. It also gives you a record if a client later questions the value of the work.

What a Billing Policy for AI-Assisted Work Needs to Cover

If you don't have a written internal policy, here's the minimum it should address:

Engagement agreement language. Clients should know upfront that you use AI tools as part of your practice, whether AI-related costs are absorbed into your fee structure or billed separately, and under what conditions. A single paragraph in your retainer covers this. If you haven't added it, add it.

Time recording standards. Set a firm rule on how AI-assisted tasks get logged. "Research (AI-assisted)" or "drafting (AI-assisted, reviewed)" gives you audit clarity without requiring a philosophy debate every time someone opens a timer.

The no-inflation rule. Write it down explicitly: no attorney in the firm bills hypothetical pre-AI time. You bill actual time spent, including verification and supervision.

Cost pass-through threshold. Decide in advance whether any AI costs get itemized on invoices. If yes, that authorization needs to be in your engagement agreement. If no, treat it as overhead and price your services accordingly.

Opinion 512 gave New Jersey attorneys a framework. Turning that framework into a billing policy that holds up in a fee arbitration isn't a theoretical exercise, it's a Tuesday afternoon of drafting that most small firms haven't taken yet.