--- title: "Costs, billing & litigation funding" url: "https://ailawframework.com/obligations/costs-billing-and-litigation-funding" type: "obligation" site: "AI Law Framework" id: "A42" task_count: 6 last_reviewed: "2026-10-10" --- # Costs, billing & litigation funding > Base costs and billing on the agreed terms, work actually performed and applicable requirements. Independently verify disclosure obligations, calculations and the allocation of checking or correction work. Canonical page: https://ailawframework.com/obligations/costs-billing-and-litigation-funding Last reviewed: 2026-10-10 Site index for agents: https://ailawframework.com/llms.txt AI compresses chargeable work, so billing pre-AI time risks overcharging (ASCR r 12.2; LPUL s 172). Costs disclosure and funding/uplift structures are separately regulated. ## Key facts - Tasks: 6 - Green: 0, Yellow: 5, Red: 1 - Levels: Green is AI drafts and the lawyer checks; Yellow is lawyer and AI draft together; Red is the lawyer writes and AI may only check, clarify or collect data. ## Principles - **Define the matter**: Confirm the client’s instructions, jurisdiction, intended output and the information available before dividing the work. - **Confirm the source material**: Check the work against the original records and identify omissions, contradictions and unresolved information. - **Record review and approval**: Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use. ## Checklist - Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use. ## Restrictions - Confirm firm, client and applicable court or professional restrictions before using any AI feature. ## Jurisdiction note Apply this guidance to the actual matter and jurisdiction. Confirm current requirements before relying on an example. ## Basis Practice guidance supports planning; the responsible lawyer confirms the scope, evidence and review requirements for the matter. AI compresses chargeable work, so billing pre-AI time risks overcharging (ASCR r 12.2; LPUL s 172). Costs disclosure and funding/uplift structures are separately regulated. ## Limits on AI assistance Red lines — never in this area ## Limits on AI assistance Never bill notional manual time for work AI did in minutes — charge only actual time spent prompting and reviewing. Never let AI structure or calculate a costs, funding, uplift or common-fund entitlement. AI subscriptions are firm overhead, not a matter disbursement (unless a usage-based charge is disclosed in the costs agreement). - Never bill notional manual time for work AI did in minutes — charge only actual time spent prompting and reviewing. - Never let AI structure or calculate a costs, funding, uplift or common-fund entitlement. - AI subscriptions are firm overhead, not a matter disbursement (unless a usage-based charge is disclosed in the costs agreement). ## Review checklist The lawyer's review checklist ## Review checklist Time recorded = time actually spent Verification-cost excess not billed Costs disclosure thresholds confirmed by a lawyer Funding/uplift calc independently verified - Time recorded = time actually spent - Verification-cost excess not billed - Costs disclosure thresholds confirmed by a lawyer - Funding/uplift calc independently verified ## Tasks (6) | Task | Level | How AI is used | What the lawyer must review | | --- | --- | --- | --- | | [Draft a costs disclosure from the matter scope and the scale or estimate](https://ailawframework.com/obligations/costs-billing-and-litigation-funding/draft-a-costs-disclosure-from-the-matter-scope-and-the-scale-or-estimate.md) | Yellow | Produce a first-draft disclosure from the scope, the estimate or scale the lawyer has named, and the firm's precedent, listing figures that still need an… | Confirm the current statutory thresholds, form and timing Confirm the disclosure rule before the client is asked to sign | | Compare a funding, uplift or common-fund agreement to the current rules | Red | Extract fees, success, control, termination and recovery terms into a table against the funding or contingency rules the lawyer has named. | Decide entitlement and permissibility yourself Do not let the tool compute or structure a fund | | Build a draft bill from the time records and the disclosure | Yellow | Turn the time entries into a draft bill grouped by task, with entries that sit outside the disclosed scope flagged. | Verify the time actually spent Check AI arithmetic independently Decide proportionality yourself | | Compare a draft bill to the last costs disclosure and any updates | Yellow | Line the bill up against the disclosure and list work, rates or totals that were not disclosed or updated. | Confirm updates were given when the current rule required them Check for undisclosed overshoot, which can make the bill unrecoverable | | Draft an offer of compromise or without-prejudice costs letter from the approved figures | Yellow | Produce a first-draft offer letter from the lawyer's approved figure, the costs-rule heading and the deadline. | Check the form and timing of the offer, which affect costs consequences Do not send a generated offer | | [Review a bill for AI-assisted work](https://ailawframework.com/obligations/costs-billing-and-litigation-funding/review-a-bill-for-ai-assisted-work.md) | Yellow | List items where AI reduced time and compare to charged time. | Ensure costs are fair and reasonable (LPUL ss 172-173; ASCR r 12.2). | ## Jurisdiction notes ### New Zealand #### Fee rules Chapters 3 and 9 of the Conduct and Client Care Rules, including the reasonable-fee factors. #### AI and time billing The Law Society asks you to review time-and-attendance billing if a tool now does work that used to be timed. #### Not Australian law No Australian costs-assessment scale or Federal Court scale. #### Litigation funding Check the FMCA if the arrangement is a financial product. Sources: - [Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008](https://www.legislation.govt.nz/secondary-legislation/pco-drafted/2008/214/en/latest/) (checked 2026-09-23) - [NZLS: Generative AI guidance for lawyers (March 2024)](https://www.lawsociety.org.nz/professional-practice/rules-and-maintaining-professional-standards/generative-ai-guidance-for-lawyers/) (checked 2026-09-23) - [Financial Markets Conduct Act 2013](https://www.legislation.govt.nz/act/public/2013/69/en/latest/) (checked 2026-09-23) ### United States Local name: Costs, billing and litigation funding #### Reasonable fees Rule 1.5. Formal Opinion 512, Florida 24-1 and California's guidance: bill time actually spent, not time the tool saved. #### AI overhead Do not mark up general AI overhead without the agreement the local rule requires. #### Funding Contingency and litigation-funding arrangements are state law. No national scale of costs. Sources: - [ABA Model Rule 1.5, Fees](https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_5_fees/) (checked 2026-09-23) - [ABA Formal Opinion 512, Generative Artificial Intelligence Tools (29 July 2024)](https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/ethics-opinions/aba-formal-opinion-512.pdf) (checked 2026-09-23) - [Florida Bar Ethics Opinion 24-1](https://www.floridabar.org/etopinions/opinion-24-1/) (checked 2026-09-23) - [State Bar of California, Practical Guidance for the Use of Generative Artificial Intelligence in the Practice of Law (2026)](https://www.calbar.ca.gov/Portals/0/documents/ethics/Generative-AI-Practical-Guidance.pdf) (checked 2026-09-23) *Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*