---
title: "Engagement and costs agreement clauses: AI use, client consent and charging for AI-assisted work"
url: "https://ailawframework.com/precedents/costs-billing-and-litigation-funding/costs-agreement-ai-clause"
type: "precedent"
site: "AI Law Framework"
id: "a42-costs-agreement-ai-clause"
area_id: "A42"
kind: "clause"
ai_level: "yellow"
version: 1
law_stated_as_at: "2026-10-17"
---

# Engagement and costs agreement clauses: AI use, client consent and charging for AI-assisted work

> Clauses for engagement letters and costs agreements that tell the client how the firm uses AI, record consent or restrictions, and state how AI-assisted work and tool costs are charged.

Canonical page: https://ailawframework.com/precedents/costs-billing-and-litigation-funding/costs-agreement-ai-clause  
Law stated as at: 2026-10-17

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

- Kind: Clause. Wording to drop into a longer document.
- Practice area: [Costs, billing & litigation funding](https://ailawframework.com/precedents/costs-billing-and-litigation-funding.md)
- Jurisdictions: New South Wales, Victoria, Western Australia, Australia, New Zealand, United Kingdom (England and Wales), United States
- AI level: Yellow. AI can help in set ways. A lawyer checks specific points before use.
- Law stated as at: 2026-10-17
- Status: Maintained. Checked on 2026-10-17 against the 8 authorities it cites, for 7 jurisdictions.

## When to use it

Insert into the engagement letter or costs agreement for every new matter where approved AI tools may be used. Pick one charging alternative. If the client prohibits AI use, record that instead and update the estimate.

## How AI may be used

AI can tailor these clauses to the firm's actual tools and the matter, but the clauses must describe what the firm really does. A lawyer confirms the tool list, the charging alternative and any client restriction.

**AI may:**

- Fill the tool list and data-location details from the approved AI tools register.
- Check the clauses for consistency with the costs disclosure and estimate in the same letter.
- Produce a plain-English summary for the client covering letter.

**AI must not:**

- Must not describe tools, safeguards or data locations the firm has not verified.
- Must not insert a charge for time saved by AI or a "technology fee" not disclosed in the estimate.
- Must not remove the client's right to restrict or refuse AI use.

**The lawyer checks:**

- The tools named are on the register and approved for this client's data.
- The chosen charging alternative matches the billing policy and the estimate.
- Any client outside counsel guidelines on AI are reflected and diarised.

## Authorities

- [Legal Profession Uniform Law ss 172, 173 and 174 (fair and reasonable costs; avoiding increased costs; disclosure)](https://legislation.nsw.gov.au/view/html/inforce/current/act-2014-16a#sec.172)
- [Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 rr 9 and 12.2 (confidentiality; no benefit beyond fair and reasonable remuneration)](https://legislation.nsw.gov.au/view/html/inforce/current/sl-2015-0244#rule.9)
- [Statement on the use of artificial intelligence in Australian legal practice (Law Society of NSW, Legal Practice Board of WA and Victorian Legal Services Board + Commissioner, 6 December 2024)](https://lsbc.vic.gov.au/news-updates/news/statement-use-artificial-intelligence-australian-legal-practice)
- [Federal Court of Australia, Use of Generative Artificial Intelligence Practice Note (GPN-AI), 16 April 2026, paras 4.8 to 4.15](https://www.fedcourt.gov.au/law-and-practice/practice-documents/practice-notes/gpn-ai)
- [Supreme Court of NSW Practice Note SC Gen 23 – Use of Generative Artificial Intelligence (Gen AI), paras 9A, 12 and 13](https://supremecourt.nsw.gov.au/documents/Practice-and-Procedure/Practice-Notes/general/current/PN_SC_Gen_23.pdf)
- [US: ABA Formal Opinion 512, Generative Artificial Intelligence Tools (29 July 2024), part F (fees)](https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/ethics-opinions/aba-formal-opinion-512.pdf)
- [UK: SRA Code of Conduct for Solicitors, RELs and RFLs para 8.7](https://www.sra.org.uk/solicitors/standards-regulations/code-conduct-solicitors/)
- [NZ: Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 ch 9 (fees)](https://www.legislation.govt.nz/secondary-legislation/pco-drafted/2008/214/en/latest/)

## Official form

[Official form](https://lsbc.vic.gov.au/news-updates/news/statement-use-artificial-intelligence-australian-legal-practice)

## Full text and drafting notes

The full text and the drafting notes are not part of this public page. Signed-in firm accounts can read them at https://ailawframework.com/precedents/costs-billing-and-litigation-funding/costs-agreement-ai-clause and through the signed-in MCP connector https://ailawframework.com/mcp/firm.

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*