Major U.S. financial institutions are leveraging the productivity gains from AI to demand reduced legal costs, with several top-tier Wall Street banks pressing their external counsel to share the financial benefits.
According to reports, Goldman Sachs (GS.US), Morgan Stanley (MS.US), and Citigroup (C.US) have communicated to their legal partners that the increased efficiency derived from artificial intelligence in routine tasks should translate into lower fees. In its discussions, Goldman Sachs has specifically inquired about the cost savings attributed to AI implementation within law firms, expressing a desire to split those operational gains.
Eric Grossman, General Counsel at Morgan Stanley, characterized the current compensation structures used by law firms as "extremely unstable," highlighting the growing dissatisfaction among clients.
Adam Meshel, who oversees global legal affairs at Citigroup, elaborated that if lawyers are able to complete matters in less time thanks to AI tools, the bank's expectation is that "the cost per transaction will drop dramatically." Citigroup has already begun asking law firms to bid competitively for work, requiring them to disclose the specific cost reductions achieved through AI usage.
Meshel further suggested that this shift in methodology could solidify into a "new working model" within the span of a year. The pressure to pass on AI-driven savings is not confined to the legal sector; other professional service providers, including consultancies and auditing firms, are experiencing similar demands from clients.
Reports indicate that top-tier management consultancies like McKinsey are facing a fundamental shift in how they charge for their services. Clients are increasingly pushing back against hourly billing in favor of compensation models tied to measurable outcomes, such as cost reduction, profit improvement, or market share gains. As consultants now rely heavily on AI for data analysis and diagnostics, the relevance of "billable hours" as a standard pricing mechanism continues to diminish rapidly.
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