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September 26, 2026

Good morning. Andrew here. If your lawyer uses A.I. and does the work in half the time, should your bill be half the price? DealBook’s Sarah Kessler goes inside the changing economics of the legal industry. Also: We’ve got a fun interview with Ari Emanuel, the superagent turned Hollywood mogul, who used some four letter words we can’t print — but that he prints in his new memoir. And make sure to take this week’s news quiz. (Was this newsletter forwarded to you? Sign up here.)

Connor Robinson

Beyond the billable hour

Outsiders often cite law as an industry under threat from artificial intelligence. But the nation’s biggest firms are eager to show off how they’ve embraced the technology.

After OpenAI announced a version of its latest A.I. model for lawyers last week, for example, a handful of top-tier firms proudly unveiled new tools.

Sullivan & Cromwell introduced “Agreement Analyzer” to help review deals; Cooley brought out “Go Public,” a tool for the S-1 drafting process that precedes an initial public offering; and Ropes & Gray said it was developing an A.I. tool that could “produce a detailed, issue-level diligence report in hours, not weeks.”

That followed a flood of A.I. news in the legal world. In the past year, Google and Anthropic have also released A.I. tools for lawyers, law firms have begun hiring chief A.I. officers and industry giants like Kirkland & Ellis have announced big investments in the creation of their own A.I. systems.

For most businesses, a mounting perception of A.I. prowess would be a clear-cut boon. But in an industry that bills by the hour, it has ruffled some feathers.

When, clients want to know, is that A.I. efficiency going to lead to lower legal bills?

“You’re getting to the point where clients are saying, ‘That’s great that you’re using A.I. and it’s making you faster, it’s making you more efficient,’” Neill Jakobe, the vice chairman of Ropes & Gray, told DealBook. But, he said, they want to know, “What does that mean for us?”

Some clients are using A.I. to make their argument for A.I. markdowns. Jennifer Leonard, the founder of Creative Lawyers, which advises law firms and corporate legal departments on adapting to A.I., said some law firms and their clients used A.I. agents to spot line items in bills where A.I. could have saved hours. “They literally have struck that out, and say, ‘I want a discount on this, we don’t want to pay for this part of the work anymore,’” she said. “Or, ‘We know you have this new A.I. tool in house because we saw your splashy press release.’”

Kyle Poe, who as vice president of legal innovation at the legal software company Legora works with customers to plan for A.I. use in their business models, told DealBook that in-house legal teams are often asking their firms to knock 20 percent to 30 percent off the bill across the board.

Firms often push back on the requests for steep discounts. They say A.I. isn’t necessarily saving that much time — at least, not yet. And that the technology is instead changing the composition of the hours, with less busy work and more substantive analysis.

Pressure from clients is arriving at the same time law firms face new, if still small, competition from so-called A.I. native law firms, which rely heavily on A.I. agents and use upfront pricing. Norm AI, a technology company with an affiliated law firm focused on financial services clients, in July raised $260 million at a $1.2 billion valuation from Khosla Ventures, Blackstone and Bain Capital — and now counts those firms among its clients.

Law firms may find themselves in a bind: Using A.I. to work faster cuts billable hours, yet rates can’t rise fast enough to make up the difference. But not using A.I. invites your competition to undercut you.

Many close to the legal industry believe that the law firm business model will eventually need to change. Thirty-five percent of the 55 large law firms surveyed by Citi last year said they expected to make changes to their billable hour business models in the next year because of A.I., while 65 percent said they expected to make changes by 2035.

Jeff Bleich, who serves as international special envoy for Anthropic, recently told a room full of legal professionals, “I don’t think the billable hour is the solution, and we’ve known it for a long time.”

There is little immediate need for a revolution: Revenue at large firms grew more than 12 percent on average during the first six months of the year, while average standard billing rates increased by double digits, according to Wells Fargo.

The billable hour is deeply embedded in every aspect of law firm operations, from insurance to performance management, and few working in the industry expect it to disappear entirely. Billable hours help manage risk for legal matters that require an unpredictable amount of work, so a law firm doesn’t end up charging $200,000 for a project that ends up costing it $400,000, or vice versa.

But some of that labor is predictable. That’s where A.I. native firms have focused, and where analysts see the most opportunity for disruption. “Bespoke litigation, major transactions and urgent strategic counseling will remain largely hourly, though with tighter budget disciplines,” researchers at the legal placement firm BCG Attorney Search recently wrote. “Repeatable or portfolio work will increasingly support fixed or hybrid pricing.”

Law firm leaders say they’re increasingly open to alternative arrangements. “Will things in large law go to more fixed-price, project-based pricing, fixed-fee models? Sure,” said Jon Ballis, the chairman of Kirkland & Ellis, in a July interview. “I think that is already happening a bit and I think it will continue.”

Jakobe of Ropes & Gray said that the firm held a conversation with clients about A.I. use at the beginning and end of each project, walking them through where A.I. was used, what its contribution was and what can be improved. He also said that he had become more open to conversations about fixed fees.

But the shift is, at best, gradual.

“Nobody wants to be the first firm who really leads the way and goes out there,” Poe of Legora said. “They’re trying to prepare for the day where they do need to start to pivot. And they want to be prepared — basically they want to be able to pull the trigger if and when this happens.”

IN CASE YOU MISSED IT

The Trump-Xi summit produced little visible progress. Sam Altman, Jensen Huang, Elon Musk and Jeff Bezos were among the titans of business who attended a state dinner for Xi at the White House, but President Trump said nothing about A.I. (he has previously called concerns about the technology’s safety “a hoax”). The leaders similarly did not announce significant policies on trade or the war in Iran.

Meta’s A.I. agent sees success and some obstacles. Muse, the personal A.I. assistant that Meta rolled out this month, has lifted the company’s share price and garnered about 3.4 million downloads. But it faced a setback this week when Amazon blocked the agent from its site. Other companies, including Instacart and OpenTable, have been more welcoming.

Energy, wars and A.I. loomed large at the U.N. Dario Amodei of Anthropic and Sam Altman of OpenAI both addressed A.I. safety. Ukrainian President Volodymyr Zelensky warned Russia’s war would expand if it wasn’t ended soon. Iran’s foreign minister proposed a seven-day plan to end the war, reopen the Strait of Hormuz and resume nuclear talks.

More big deals: Jeff Bezos poured another $2 billion in Blue Origin, bringing his total investment in the space company to $30 billion. DoorDash agreed to pay $131.5 million for shortchanging workers. And David Ellison, Paramount’s chief executive, settled an antitrust lawsuit brought by states over his plan to buy Warner Bros. Discovery.

Ari Emanuel’s new memoir, “Roll the Calls,” is a behind-the-scenes look at some of the highest-profile entertainment deals in the last decade. Jason Henry for The New York Times

Diary of a Dealmaker

Ari Emanuel’s new memoir, “Roll the Calls,” has gotten a lot of attention this week for its expletive laden dishing, its many celebrity mentions (the superagent details encounters with Oprah, Tom Cruise and two presidents) and its author’s intense daily habits (which include eating a cup of live worms daily).

But it’s also a behind-the-scenes look at some of the highest-profile entertainment deals in the last decade, including the merger of Emanuel’s talent agency, Endeavor, with William Morris, and the creation of TKO Holdings, through the merger of W.W.E. and U.F.C. DealBook’s Sarah Kessler spoke with Emanuel about the book. The interview has been condensed and edited.

The way you describe some people in the book is kind of brutal. For example, you call one executive “a mix of old farts and bad ideas.”

I hate when people say, “Well, let’s take a meeting about that.” Well, we’re in a meeting. Let’s deal with it now. They have this whole need to understand a process, and they think that is the way to get to an answer, and I disagree.

And I think there’s some executives maybe that I talk about in the book who love process, because it gives them control. But creativity, ideas, matter more.

Have you heard from any of these people?

Not yet.

Do you have mixed feelings about “Entourage,” the HBO show with a character named Ari who was famously based on you?

Now, I only have good feelings about it. Back then, I didn’t really understand it, and it was confusing because at times it was leading the conversation in my life.

You wrote that the show borrowed from you, but also you started to borrow from the character.

I didn’t have a “Lloyd," I never said, “Hug it out, bitch.” I didn’t do any of those things. But, you know, people wanted me to do it. And it was nuts. I said to Mark Wahlberg at the time, this is horrible. And he and his manager said, this is going to be the greatest thing that ever happened to you.

The book discusses your relationship with Trump and dropping him as a client —

I didn’t drop him as a client. He was the president of the United States. You can’t be a client at that point. You’re the leader of the free world and the leader in America.

OK, so not dropping him as a client. But it was unclear to me what your relationship is like now.

Listen, as of three weeks ago, I talked to him about the film and movie tax credit, and he asked me to get him a memo on it. And I did get him the memo.

I don’t want to live in an echo chamber. If I just want to hear my side of a conversation, that’s kind of like being in a cult and I don’t want to live in a cult. I want to live in a society. And what it takes to live in a society is to hear the other side.

You recently brought a U.F.C. fight to the White House lawn. Do you think it benefited the company?

It’s one of the greatest marketing — I mean, there were over a billion impressions. The social media, the engagement and the international and domestic excitement around it has proven out. We did have in the plan that there would be a loss. So it just matched up the plan.

Have you sold the movie rights to the book?

Nobody’s going to want to make a movie of my craziness.

Apparently they wanted to make a TV show.

That was about Mark Wahlberg.

Letterboxd, a social network for movie lovers, has seen its popularity skyrocket in recent years. Sebastian Gollnow/picture alliance, via Getty Images

Considering a sequel

This question comes from a recent article in The Times. Click an answer to see if you’re right. (The link will be free.)

Letterboxd, a social network for movie lovers where both everyday fans and celebrities share their taste in film, is considering a sale. Any deal would be expected to value the company at more than $300 million.

Which company has not submitted an expression of interest?

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Andrew Ross Sorkin, Founder/Editor-at-Large, New York @andrewrsorkin

Brian O'Keefe, Managing Editor, New York @brianbokeefe

Bernhard Warner, Senior Editor, Rome @BernhardWarner

Sarah Kessler, Deputy Editor, Chicago @sarahfkessler

Michael J. de la Merced, Reporter, London @m_delamerced

Niko Gallogly, Reporter, New York @nikogallogly

Lauren Hirsch, Reporter, New York @LaurenSHirsch

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