The engagement-letter language and the bill that survive an Opinion 512 audit.

In connection with the Matter, we may use the following generative AI tools to assist with our representation: [AUTHORIZED TOOLS — e.g. Harvey, Spellbook, Casetext CoCounsel, Lexis+ AI, ChatGPT Enterprise]. These tools may be used for [CATEGORIES OF WORK — e.g. legal research synthesis, first-draft preparation of motions and briefs, deposition-preparation summaries, contract clause comparison]. Each authorized tool operates in a tenant-isolated environment configured so that inputs are not used to train the underlying model and are not accessible to other tenants of the vendor. The firm will obtain separate written consent before using any generative AI tool not listed above on your matter.

Maps to ABA Op. 512's specific-consent standard [S01], the California Practical Guidance no-training-on-confidential-input rule [S08], and the NYSBA Task Force communication recommendation [S09].

Where the use of an authorized generative AI tool would involve the disclosure of any of your confidential information to the tool's underlying model, we will obtain your informed consent in writing before that disclosure occurs. The information we will provide to you in seeking that consent will include the specific tool, the kinds of information that will be disclosed to the tool, the vendor's tenant-isolation and data-handling posture, the alternatives we considered, and the benefits and risks of the proposed use to your representation. Boilerplate consent will not satisfy this clause.

Mirrors ABA Op. 512's informed-consent standard for self-learning tools [S03], Florida Op. 24-1's third-party AI disclosure rule [S05], and the California Practical Guidance prohibition on inputting confidential information without provider conditions [S08].

Where this Matter is billed on an hourly basis, we will bill only for time actually expended on your representation. Where generative AI is used and reduces the time required to perform a task, that time saving will be reflected in the invoice; we will not bill for time the lawyer did not spend. We may bill for time spent reviewing, refining, or verifying generative AI output where that work is performed by the responsible attorney. Where this Matter is handled on a flat fee, contingent fee, or other alternative fee arrangement, the fee set forth in the engagement letter reflects the value of the work product to be delivered; we will preserve internal records of AI-assisted activity sufficient to demonstrate that the agreed fee remains reasonable under the factors in Rule 1.5(a).

Maps to ABA Op. 512's Rule 1.5 fee analysis [S01] [S02], Texas Op. 705's hourly-billing limit [S04], DC Op. 388's hourly-efficiency rule [S07], the California Practical Guidance billing posture [S08], and Florida Op. 24-1's actual-cost transparency requirement [S06].

The firm treats the cost of authorized generative AI tools as part of office overhead by default. Where, on a particular Matter, the firm seeks to charge you for a portion of an AI tool's cost or on a per-use basis — whether because the tool is expensive and proprietary, or because the matter requires use beyond ordinary practice — we will explain the proposed charge in writing and obtain your written consent before incurring it. Any AI cost charged to you will be itemized on the invoice.

Maps to ABA Op. 512's overhead-or-charge framework [S01], Texas Op. 705's per-use pass-through with consent [S04], and Florida Op. 24-1's preferred-in-writing disclosure standard [S06].

Generative AI tools are treated as nonlawyer assistance under Rule 5.3 of the applicable Rules of Professional Conduct. Where AI is used on a Matter, the responsible attorney supervises the AI as the firm supervises any nonlawyer assistant, including verifying factual and citation accuracy of AI work product before any use, filing, or transmission. Where this Matter would otherwise have been staffed by a paralegal or junior associate and is instead staffed by a partner or senior associate plus AI, we will inform you of that staffing decision; the result will not increase the fee charged.

Aligns with ABA Op. 512's supervision standard [S03], the Pennsylvania-Philadelphia Joint Formal Op. 2024-200 [S11], and the NYSBA Task Force's paralegal-supervision recommendation [S09].

Clauses the firm should accept without negotiation: AI-use disclosure to the client, public-LLM prohibition on confidential or restricted information, tenant-isolation requirement on enterprise tools, no-training carve-out in the vendor contract, output validation and senior-attorney sign-off, vendor security attestation right (SOC 2 Type II / ISO 27001), AI saved-time discount on hourly bills, anonymization of confidential inputs, vendor-exit data-deletion confirmation, breach-notification SLA, AI-disclosure in court filings where the standing order requires it, privilege-preservation requirement, and the no-AI-on-privileged-communications rule.

Each of these clauses is already firm-policy-default for any midsize firm with regulated clients. The firm's AI policy and authorized-tools register satisfy the underlying requirement.

Clauses worth negotiating before signing: outright AI bans (negotiate to permit enterprise-isolated tools and the firm's spell-check / document-compare utilities); per-time-entry AI disclosure on bills (negotiate to matter-level rollup where time entries already capture review work); data-residency restrictions (negotiate vendor-published data-residency posture vs. blanket US-only); tool inventory reporting (negotiate quarterly cadence over per-matter); sub-processor disclosure (negotiate vendor-published sub-processor page as the reference, with 30-day prior notice for material changes); audit-log retention (negotiate hash-based or summary-level log retention where full prompt-and-output retention is itself a confidentiality risk); right-to-terminate-for-AI-misuse (carve out non-refundable matter costs).

The negotiation memo lives in the matter file. The same memo is the carrier-renewal exhibit at policy renewal.

Clauses the firm should reject and replace: AI-output indemnity provisions broader than the firm's standard malpractice carrier coverage. Such indemnities convert a malpractice question into an uninsured contractual liability; the firm's standard malpractice posture and Rule 5.3 supervision attestation cover the operational risk and align with insurance reality. The replacement language references the firm's AI policy, the supervision protocol, the vendor data-handling attestations, and the firm's professional liability coverage. The carve-out for fraudulent or willfully reckless AI use is preserved.

Coordinate the rejection with the firm's malpractice broker; some carriers will permit a narrow AI-output indemnity if the firm's underlying policy has affirmative AI coverage. Most do not.

A. Tool authorization at engagement open.

Confirm the AI tool used on the Matter is on the firm's authorized list as of the engagement-open date. Where the client OCG requires pre-approval of specific tools, the OCG-response memo names the approved tools and the date of approval. Retained: authorized-tools register snapshot at engagement open.

B. Rule 1.4 communication note.

Per ABA Op. 512 [S01] and the NYSBA Task Force [S09], the matter file records (1) that disclosure to the client about AI use was considered, (2) the decision (disclose / do not disclose / disclose conditionally), and (3) the basis (informed consent already obtained in the engagement letter; no client confidences input; client OCG defines disclosure default). Where disclosure is made, the communication itself is in the file.

C. Time-entry narrative.

AI-assisted time entries distinguish (1) AI-output review and refinement (billable on hourly), (2) AI-output verification (cite-check, source-pull, fact-check — billable on hourly), (3) AI-tool learning time (not billable on hourly, except where client specifically requested the tool — Texas Op. 705 [S04] and ABA Op. 512 [S01] both name this), and (4) AI-saved time (not billable). The time-entry template in the firm's billing system is configured to capture each category.

D. Supervisor-review record.

For each AI-assisted work product, the responsible attorney's verification is recorded with timestamp. The verification confirms factual and citation accuracy before any use, filing, or transmission. The supervisor sign-off is the operational expression of the Rule 5.3 nonlawyer-assistance standard ABA Op. 512 imports for AI [S03].

E. AI-tool-usage log retention schedule.

Authorized AI tools log the user, timestamp, prompt, and output for each session on a Matter. The firm retains the log for a minimum of three years post-matter closure (or per the client OCG's longer retention requirement). Where full prompt-and-output retention is itself a confidentiality risk (the prompt would be protected as work product if separately written), the firm retains a hashed or summary-level log instead.

F. Pre-bill review.

Before each invoice issues, the responsible attorney or firm administrator reviews the matter file for (1) any AI-saved time appearing on the bill, (2) any AI-subscription pass-through that lacks documented client consent, (3) any AI-assisted time entry that is not paired with a supervisor-review record, and (4) any AI-material matter where the Rule 1.4 communication note is missing. The pre-bill review is documented in the billing system.

G. Carrier-renewal export.

At the end of the policy period, the firm exports a matter-list summary with the AI-material flag, the count of disclosure-considered notes, the count of supervisor-reviewed AI work products, the cite-check log totals, and the count of any reportable AI-related incidents. The export is the carrier-renewal exhibit. A firm that hands the broker the export at renewal is not asked the open-ended governance question.