How law firms came to charge by the hour, and how a new AI-native firm has built itself without it.
Usually when I write an article, it's because I've read a post on LinkedIn that I didn't fully understand, or found interesting and wanted to research further. This time, I'm writing for a different reason. My brother, who is a lawyer, sent me a short but clear message: "Research Falcon." So, I did!
Before we get into Falcon, it's important to understand how law firms have charged for their work over the years.
Before the 20th century, lawyers were rarely paid in proportion to the time they spent. Fees were fixed for specific tasks, sometimes set by law, or based on the value of the outcome.1 Over the following decades, bar associations in the US set minimum fees for each type of work, and lawyers who charged less could face discipline. Then, in the middle of the 20th century, the profession began encouraging lawyers to record their time and set hourly rates, arguing that lawyers were being underpaid for the work they did.1
The turning point came when the US Supreme Court ruled that these minimum fee lists broke competition law.2 With the fixed fee lists gone, charging by the hour became the obvious alternative, and by the end of the century it was the standard model for law firms of all sizes.1
Once hourly billing became the standard, the price of each hour kept climbing. At the biggest firms in the US, senior partners now charge well over $2,000 an hour.3 The UK follows a similar pattern, with Magic Circle partners charging between £1,000 and £1,500 an hour by 2022.4
The main thing to take from this section is simple: over time, the billable hour became very, very expensive.
Falcon is a new law firm that launched in Belgium on 1 October 2026. It describes itself as an "AI-native law firm", and it handles commercial contracts for small and medium-sized businesses.5
The idea came from the founders' own experience as clients needing lawyers. As CEO Amaury Gérard put it: "We got tired of paying four thousand euros to wait three weeks for a contract we needed signed on Friday."5
Falcon doesn't charge by the hour. Instead, clients pay a flat monthly fee, from €1,000 a month for up to six contract reviews, up to €5,000 a month for high-volume businesses.5
At Falcon, AI does the first review, and a lawyer then signs it off. Each client starts with a 45-minute call, so Falcon can understand the business, how much risk it's willing to take and so on. This becomes the client's "playbook". When a contract comes in, the AI checks it against the playbook and produces a plain-language summary, the risks it has spotted and suggested changes, each with a reason.5
A named, qualified lawyer then reviews it and signs it off before it goes back to the client, all on the same day!5
Falcon says traditional firms serve around 50,000 large European companies, while more than 32 million smaller businesses and startups fall outside that model.5 So, it seems that for now, they aren't going after the big dogs.
Not yet, at least not on its own. Falcon is still very new. But it has arrived at a time when the big firms are already feeling the pressure from some of their most important clients.
In September 2026, the Financial Times reported that three of Wall Street's biggest banks were pushing their law firms to cut costs because of AI.6 Citi started asking firms competing for its work how much they save by using AI. Morgan Stanley said it would make firms bid more competitively and use more alternative fee arrangements, like fixed fees. And Goldman Sachs started looking at how the time AI saves should show up in its legal bills.67
But here's the twist: so far, the billable hour is holding up just fine. In the first half of 2026, demand for lawyers' time actually rose 4.2%, more than double the usual rate, according to Citi's own law firm banking group.8 Clients say AI is saving time, yet they're paying for more hours than ever.
The billable hour has been the backbone of law firms for decades, and it has become very expensive along the way. Now the biggest banks are asking firms to charge less within the old model, while Falcon has simply built a firm without it. Whether Falcon is the start of something bigger, or a small firm serving a niche, is too early to say. I guess we'll just have to wait and see, but as always, The Redline sticks to the here and now, not the future.