Charging by the Hour When AI Does the Work: What NJ's Preliminary AI Guidelines Actually Say About Fee Fairness

Solo attorneys in New Jersey have been asking a version of this question since generative AI became a real part of their workflow: if a task that once took three hours now takes twenty minutes, what do I put on the invoice?

The NJ Supreme Court's "Preliminary Guidelines on New Jersey Lawyers' Use of Artificial Intelligence" (January 24, 2024) does address fees, though not in the sustained way the question deserves. Understanding exactly what the guidelines say, and precisely where they go quiet, matters more than most practitioners seem to realize.

What the Preliminary Guidelines actually say about fees

The guidelines identify fee-related concerns in two places. First, they note that attorneys must not charge clients for time or work that AI has rendered unnecessary, and they tie that principle directly to NJ RPC 1.5(a), which requires that a fee be reasonable. Second, they flag that attorneys must be transparent about how AI affects the work product being delivered, without specifying what form that transparency must take in a billing context.

That's it. The guidelines don't prescribe a billing model, don't define a floor for what "rendered unnecessary" means in practice, and don't address the harder scenario: work that AI accelerates significantly but does not eliminate.

The gap that matters for solo practitioners

The hard case isn't the three-hour task that now takes twenty minutes. Most attorneys intuitively understand they shouldn't bill three hours for twenty minutes of work. The harder case is the task that used to take three hours, now takes one hour because AI handled the first draft, and still requires real professional judgment in that hour. Is billing the full hourly rate for that hour reasonable? Is some value-based adjustment required? The Preliminary Guidelines don't say.

NJ RPC 1.5(a) provides the framework, listing eight factors relevant to reasonableness, including "the time and labor required," "the novelty and difficulty of the questions involved," and "the skill requisite to perform the legal service properly." None of those factors point cleanly toward a discount whenever AI is involved. A research memo that AI drafts in ten minutes might still require forty-five minutes of attorney review to be trustworthy enough to send. The skill and judgment in that review is real legal work.

The problem is that the Preliminary Guidelines invoke RPC 1.5 without working through that analysis. Attorneys are left to do it themselves, which means most won't do it at all.

A related transparency obligation that gets overlooked

The guidelines' transparency language applies to more than disclosure about AI use in the abstract. When AI materially changes how a matter is staffed or how quickly work gets done, clients arguably have an interest in knowing that, particularly if they're paying hourly rates set before the attorney had access to these tools. That doesn't mean attorneys owe clients a line-item breakdown of which tool did what. It does mean that the retainer agreement, or at minimum the attorney's billing practices, should be coherent with the reality of how work is being done.

Some solo practitioners have started building a flat-fee or hybrid structure into AI-assisted work, which sidesteps the hourly compression problem entirely. That's a sensible approach for routine tasks where AI's contribution to efficiency is predictable. For complex, judgment-heavy matters, hourly billing isn't going anywhere, and the analysis under RPC 1.5(a) still applies every time.

What ACPE Opinion 701 adds (and doesn't)

ACPE Opinion 701 (2006), which addresses electronic storage and third-party service providers, is sometimes cited in AI billing discussions because it requires attorneys to exercise due diligence over vendors who handle client information. That obligation is real, but Opinion 701 has nothing to say about how fees are calculated. Connecting it to billing ethics is a stretch. The governing authority on fees is RPC 1.5(a), full stop.

The ACPE has not issued an opinion specifically addressing AI and fee arrangements. That silence is notable given how quickly the practice has changed.

A concrete place to start

If you're billing hourly for AI-assisted work and you haven't updated your retainer agreement since adopting these tools, that's the first thing to fix. Your retainer should describe, at a general level, that the firm uses AI tools to improve efficiency, that fees are set to reflect the value and skill of the legal work rather than the time consumed by a particular tool, and that your billing is governed by NJ RPC 1.5(a). That language doesn't require you to discount every invoice. It does give clients a truthful picture of how your practice works, which is what the Preliminary Guidelines are asking for.

What the rule requires

NJ RPC 1.5(a) requires that an attorney's fee be reasonable, evaluated against eight listed factors including the time and labor required, the difficulty of the questions involved, and the skill required to perform the service. The NJ Supreme Court's Preliminary Guidelines on New Jersey Lawyers' Use of Artificial Intelligence (January 24, 2024) state that attorneys may not charge clients for time or work that AI has made unnecessary, and that transparency about AI's role in the work is expected. The guidelines expressly invoke RPC 1.5(a) as the governing standard.

What I recommend

Update your retainer agreement now to describe your use of AI tools and clarify that fees reflect professional judgment and skill, not raw hours. For routine tasks where AI's efficiency gain is predictable and large, consider whether a flat-fee structure is more defensible than hourly billing. For complex matters, document your review process so you can demonstrate, if asked, that the hour you billed reflected real attorney judgment, not just accepting AI output. Do not cite ACPE Opinion 701 in support of billing practices; it addresses vendor oversight, not fee calculation. Until ACPE issues an AI-specific fee opinion, RPC 1.5(a) and the Preliminary Guidelines are your only primary sources, and you should build your billing practices around exactly what those sources say, not what you hope they imply.