For years, law firms have danced around the issue of how artificial intelligence (AI) will change the delivery of legal services. Much of that discussion has focused on drafting efficiencies, research capabilities and whether we will still need junior lawyers (we will).
On 8 October 2026, the Financial Times reported (Voice of experience: in-house legal teams face pros and cons of AI) that IAG was using AI-enhanced software to review the invoices of its panel law firms. According to the article, this is no mean feat, with approximately 50,000 panel-firm invoices being scrutinised each year.
In essence, the AI-enabled software assesses time spent, as well as lawyer seniority, on the matter and compares these against IAG’s database of previously instructed likeminded insurance matters. Any invoice that is unexpectedly high is returned to the service provider with a ‘please explain’ note.
“How well is this going?” for IAG you might ask. The company states that it has achieved a return on investment exceeding 800% in a little over a year.
What IAG’s experience tells us
Other than scaring us all to bits, what does this IAG story tell us?
Firstly, it tells us that AI is now very much part of in-house’s oversight program. Secondly, while IAG’s reported oversight is merely evidence of how one in-house team operates, it provides concrete insight into how Australian in-house teams are looking to use technology to help assess external legal expenditure at scale.
So what does this mean?
Well, for Australian law firms, the significance of this development extends beyond the headline number. It raises a practical question about whether the way a matter is staffed, managed and billed will withstand increasingly systematic client scrutiny.
Importantly, the commercial implication is straightforward:
A law firm’s invoice is now part of a wider body of evidence about how that firm delivers work.
This is why partners need to agree the intended team and explain where senior input will add value before the matter commences (at Engagement Level), so the client understands the reason for your leveraging and its likely effect on cost ahead of an invoice they may receive 3 months after the matter has closed.
How confident are you that your firm’s pricing and resourcing decisions would stand up to this scrutiny?
At GSJ Consulting, we help law firms move from price taker to price setter. Get in touch to discuss how you can build a stronger pricing proposition before your client’s AI starts asking the questions.
