Legal AI Vendors Are Shifting to Consumption-Based Pricing Models That Have the Potential to Lead to Budget Shocks for Unprepared Functions
“As legal AI adoption grows, tools consume ever more computing power, putting vendors under increasing pressure to align pricing more closely with usage,” said Shannon Nakamoto, Senior Director Analyst, Research, in the Gartner Legal & Compliance Practice. “Therefore, Gartner is predicting that by 2028, consumption-based pricing will account for over 35% of net new corporate legal technology spend with major vendors.”
AI Success Could Lead to Budget Shocks
Traditional software procurement methodologies will likely prove insufficient for evaluating AI-enabled legal technology. As vendors adopt combinations of subscriptions, credits, consumption allowances and overage charges, legal departments will need greater visibility into how costs are incurred and what activities drive spending.
“Pricing transparency should be a critical buying criterion for GC,” said Nakamoto. “It’s essential to understand how AI consumption is measured, what drives costs and how spending will change as adoption grows.”
Manage AI Spending by Use Case, Not by Tool
“GCs should stop asking, ‘How much AI are we using?’ and start asking, ‘Which legal outcomes justify the AI consumption required to achieve them?’” said Nakamoto. Doing that requires a solid understanding of how specific use cases drive AI spending.
