Pricing in medicolegal. When AI cuts the time in half, where do the savings go?

Here's the question medicolegal hasn't asked yet. When AI cuts the time it takes to produce a report in half, where do the savings go?

The expert who spent less time on it? The provider who built the workflow? The lawyer or insurer who paid the fee? Or somewhere else entirely?

The conversation already happening in legal

The broader legal industry is already wrestling with this question. AI has moved into contract review, discovery, legal research, and due diligence. Productivity gains are significant.

In March 2023, Goldman Sachs estimated that approximately 44 per cent of work activities within legal occupations could be automated by generative AI, making legal work one of the professions most exposed to AI-driven task automation. The estimate refers to exposure of work tasks, not the proportion of legal jobs expected to disappear. Other studies in adjacent legal AI work have reported productivity gains of between 30 and 80 per cent on specific tasks.

Which has set off a pricing conversation in law that didn't exist three years ago. Clients are pushing back on billable hours for work that AI now does faster. Firms are exploring fixed fees, value pricing, and outcome-based pricing. The debate has shifted from whether AI will change legal work to how the value created by those gains should be shared.

How we got here

Before we talk about where pricing is going, it's worth being honest about where it's come from. And about the fact that medicolegal pricing isn't one market. It's two.

At the top of the private market, fees have climbed substantially over the past decade. Some providers and senior specialists now charge $4,000 to $6,000 per report, sometimes more. The justification has been consistent: reports take longer, briefs are more complex, experts are scarcer, demand has outstripped supply. The clinical detail required to write a defensible report has expanded as legal expectations have sharpened. The clients, plaintiff law firms on CFA matters and defendant insurers managing complex liability, have largely absorbed the increases because the alternative was not getting the report at all.

Gazetted fee schemes have moved in the opposite direction. Workers comp, motor vehicle, and other scheme-based fees have not kept pace with the private market. The gap is now wide enough that some experts have stopped taking scheme work entirely. New South Wales is experiencing this more than most. Schemes are struggling to find experts willing to write reports at the set rate. The supply problem is real, and it's getting worse.

Two pricing markets running in opposite directions. The private market has climbed. The scheme market has stalled. Neither has been seriously challenged on cost grounds, because the clients had nowhere else to turn.

AI changes that. For the first time in a decade, there's a real argument that production time is decreasing, not increasing. The justifications worked when production effort was rising. They don't work the same way when it's falling.

Three places the savings could land

1. The provider and the expert keep the savings

The fee stays the same. The expert spends less time on each report. The provider charges what it always charged. The margin per report goes up. This is what happens by default if nobody pushes back, and the question is how long clients will accept it once productivity improvements become visible.

2. The client takes the savings back

Plaintiff lawyers and insurers demand lower fees. The argument is reasonable on its face: if the work takes less time, it should cost less. The challenge is whether lower pricing leaves enough room for continued investment in quality, service, and expert engagement. The workflow that produced the gains has to be sustained for the gains to continue.

3. The savings get reinvested in quality

The fee stays the same. The expert spends the same time, but a higher proportion of it on the parts AI can't do: clinical judgement, causation reasoning, cross-examination preparation. The provider reinvests its share in better intake, brief preparation, faster turnaround, and real verification before reports leave the panel. This assumes the gains are reinvested rather than extracted, which depends entirely on the provider.

The question nobody wants to answer

There is a reasonable argument that some efficiency gains should flow back to the clients paying for the work. There is also a reasonable argument that the workflow producing those gains needs continued investment that someone has to pay for. Both are legitimate. Neither has been seriously tested in medicolegal yet.

If AI cuts report production time by 40 per cent and pricing doesn't move, is that innovation or margin expansion? Insurers will answer one way. Providers another. Experts another. Senior plaintiff lawyers running CFA matters will have a fourth answer. None are obviously wrong. All have skin in the game.

A provider keeping the gains will say nothing. A provider passing them back will let the price fall. A provider reinvesting them has the hardest job: they have to tell their customers what they're doing differently, why the same price now buys more, and what changed in the workflow to make it possible.

What lawyers and claims leadership should do

My recommendation, simply: ask your provider what AI is doing in their workflow. Not whether they use it, every provider will, eventually. Ask what specifically it's doing, and how that will impact price, quality, time, or any other measure that matters to the file.

A provider that can answer clearly is more likely to have thought carefully about where the gains are being captured and how they're used. A provider that gets defensive, vague, or treats the question as inappropriate is harder to evaluate on either count.

The bottom line. AI is going to compress report production time across medicolegal. The pricing model the industry runs on assumes a production effort that no longer reflects reality. Every provider will eventually have to answer a question they haven't yet been asked. Not whether they're using AI, what happened to the productivity gains once they did.

Next fortnight: what good looks like in a medicolegal provider, the questions that separate the providers operating at the level senior matters need from the ones that aren't.