Billing for AI-Assisted Work in NJ: What RPC 1.5 Actually Permits Solo Attorneys to Charge

A client hires you to research a coverage issue in a commercial insurance dispute. Normally, that's a three-to-four hour task. You run it through a legal AI tool, get a solid first-pass analysis in eighteen minutes, spend another forty minutes verifying citations and adding your own judgment, and bill one hour total. Fair enough.

But what about the attorney down the street who runs the same query, bills three hours anyway, and figures the client will never know the difference? Or the solo practitioner who bills the AI tool's subscription cost as a separate line item on top of hourly time? Or the one who shaves the hours but quietly bumps the rate to compensate?

These aren't hypothetical edge cases. They're the billing decisions NJ solo and small-firm attorneys are making right now, mostly without a clear framework, and RPC 1.5 is the rule that governs all of them.

What RPC 1.5 Actually Says

New Jersey's RPC 1.5(a) prohibits fees that are "unreasonable." The rule lists eight factors courts and disciplinary bodies use to evaluate reasonableness, including the time and labor required, the novelty and difficulty of the questions involved, the fee customarily charged in the locality, and the experience, reputation, and ability of the lawyer.

Notice what that list does not say: it does not say you must bill by the hour. It does not say the client is entitled to benefit from every efficiency you create. But it also does not give you a blank check to charge for time you did not spend.

The traditional interpretation of RPC 1.5 has always allowed value billing, flat fees, and contingency arrangements, all of which decouple the fee from actual time spent. AI-assisted efficiency fits comfortably into that framework, but only if you're thoughtful about how you structure and communicate the arrangement.

The Three Billing Mistakes NJ Attorneys Are Making Right Now

Billing the old time when you spent the new time. This is the most straightforward violation. If AI genuinely reduced your research time from four hours to forty-five minutes and you bill four hours without any basis for doing so, you've charged for time you did not spend on a task that did not require it. That's a fee RPC 1.5 cannot support. The fact that you "would have" spent four hours without the tool is not a legal justification.

Treating AI subscription costs like third-party disbursements. Some attorneys pass through AI tool costs as a separate expense line, similar to court filing fees or process server charges. That approach is legally shaky unless your engagement letter specifically addresses it. General overhead costs, including software subscriptions you use across many client matters, are typically considered part of the basis for your hourly rate, not a billable disbursement. The NJ Rules don't carve out AI tools as a special category. If you want to charge separately for AI tool usage, you need a clear fee agreement provision that clients acknowledge upfront.

Raising hourly rates without telling anyone. A few attorneys have quietly adjusted their rates upward to offset reduced hours, which is entirely permissible in principle. Hourly rates are not capped by RPC 1.5. But if you're doing this without updating your engagement letters or notifying existing clients, you're creating a fee dispute waiting to happen and potentially an RPC 1.5 problem if the new rate was never communicated before the work was done.

A More Defensible Approach

The cleanest path forward is to restructure your fee agreements before AI efficiency becomes a billing ambiguity. A few specific things worth doing:

First, consider moving more matters to flat or hybrid fees where the efficiency gain is simply baked into your pricing model. A flat fee for a standard LLC operating agreement doesn't create an RPC 1.5 problem when AI helps you draft it faster. Both you and the client benefit.

Second, if you're staying on hourly billing, audit what you're actually tracking. Bill the time you spend, not a reconstructed estimate of what you "would have" spent. Your time entries should reflect genuine attorney activity, including the time spent reviewing, verifying, and editing AI output, which is real legal work.

Third, update your engagement letter to address AI tool costs explicitly. State whether they're included in your hourly rate, charged as a flat monthly add-on, or absorbed into firm overhead. One sentence of clarity now prevents a fee dispute later.

The NJ Supreme Court Committee on Attorney Ethics has not yet issued a formal opinion specifically on AI billing, but the existing RPC 1.5 framework is more than adequate to evaluate these questions. If your billing practices wouldn't survive a client asking you to walk through your time entries line by line, that's the clearest signal the current approach needs revisiting before it becomes a disciplinary matter.