A US federal appeals court has rejected an attempt to reduce a law firm’s legal fee award over its use of artificial intelligence, ruling that the technology’s involvement alone does not establish that the lawyers charged unreasonable amounts.
The 10th US Circuit Court of Appeals upheld a $115,000 fee award to Brownstein Hyatt Farber Schreck, the law firm representing defendants in a trade secrets dispute. The court found that the trial judge had properly examined the firm’s billing records before approving the amount.
The plaintiffs argued that the defence lawyers’ use of AI should have resulted in lower fees, particularly for tasks that could have been completed more efficiently with the technology.
The appeals court, however, found no evidence that AI had made the hours actually billed by the defence team unreasonable.
AI Efficiency Does Not Eliminate Lawyers’ Responsibilities
In its ruling, the three-judge panel acknowledged that AI and other technological tools can make legal research and related work more efficient. However, it stressed that lawyers remain responsible for checking the accuracy of legal authorities and arguments generated with the assistance of such tools.
The decision arrives at a time when law firms are increasingly incorporating AI into research, drafting and other legal tasks. Its growing use has sparked debate over whether technological efficiency should translate into lower legal bills for clients.
Christopher Ottele, a partner at Brownstein Hyatt who represented the defendants, welcomed the ruling, describing AI as a powerful tool that established law firms should embrace.
He said the decision reinforced that AI cannot replace the professional judgment and legal analysis attorneys must exercise in every court filing.
The plaintiffs’ lawyer did not immediately comment on the ruling.
Trade Secrets Dispute Behind the Fee Challenge
The case originated in a 2024 lawsuit filed by Flux Drive, a company specialising in industrial motor-efficiency equipment.
Flux Drive alleged that a former engineer had taken its proprietary information and transferred it to a Chinese manufacturer. The court dismissed the lawsuit and directed Flux Drive to pay the defendants’ legal fees.
The company challenged the fee award on appeal, raising several objections. Among them was the allegation that the defence lawyers had charged for routine administrative tasks and that their use of AI should have reduced the time spent on legal work.
The defendants rejected those claims, arguing that all AI-assisted legal research had been independently verified by attorneys. They also maintained that Flux Drive had failed to identify any specific billing entry that was inflated, repetitive or unreasonable.
The appeals court ultimately found no basis to disturb the lower court’s assessment.
A Significant Ruling as AI Enters Legal Billing
The decision offers an important signal for the legal profession as firms increasingly rely on AI-powered tools.
While the technology may accelerate certain aspects of legal work, the court’s ruling indicates that its use does not automatically make a lawyer’s fees excessive. The focus remains on whether the billed work was reasonable and whether attorneys fulfilled their professional obligations.
