The argument the court rejected
A federal appeals court has ruled that a law firm’s use of artificial intelligence does not, on its own, make its billed hours unreasonable. The Tenth Circuit issued the published opinion on Friday in Flux Drive, et al. v. Sparks, et al., affirming a $114,663.11 attorneys’ fee award in full.
The plaintiffs had attacked the award on three grounds. The third was that defence counsel “should have billed fewer hours due to their reliance on artificial intelligence (‘AI’) and other online research tools.” Writing for a panel of Judges Matheson, McHugh and Federico, Judge Carolyn McHugh held that they had identified no evidence that counsel’s use of AI resulted in excessive billing.
Why efficiency does not automatically cut the bill
The court did not say AI is irrelevant to a fee award. It accepted that a firm’s use of AI and online research tools may reduce the number of hours required for research and so lower the lodestar, citing the Second Circuit’s 2004 decision in Arbor Hill on online research services.
What it put on the other side of the ledger was verification. As the magistrate judge had explained, ethical rules require counsel to check the cases they cite and ensure arguments rest on legal authority — work that does not disappear because a tool drafted the first version. The opinion cites three recent AI cases to make the point: Amarsingh v. Frontier Airlines, in which the Tenth Circuit this year sanctioned an attorney who used a generative AI tool to research and draft an appellate brief without checking whether the cited cases existed; Wadsworth v. Walmart, a 2025 Wyoming decision finding a Rule 11 violation over AI hallucinations in filings; and Coomer v. Lindell, a Colorado case holding that Rule 11 applies to AI use.
The conclusion follows from that pairing: even assuming AI might make attorneys more efficient in the long run, the plaintiffs had not shown that the hours actually expended were unreasonable.
What was actually at stake
The fees arose after the district court in Colorado dismissed the claims against the Rong defendants for lack of personal jurisdiction. Colorado’s fee-shifting statute makes an award mandatory in tort actions dismissed before trial. A magistrate judge reviewed the billing records, found no block or double billing, found the rates consistent with the Colorado market, and recommended the full amount.
The plaintiffs’ other two arguments — serial billing across motions, and partner time on ministerial tasks — failed for the same reason as the AI argument. They identified no specific entries.
Why it matters
Fee disputes are where the economics of AI-assisted legal work get decided in practice, and this is a published appellate opinion rather than a district court order. It sets the burden: a party arguing that a firm’s AI use inflated a bill has to point at the billing records, not at the technology.
What to watch
Whether other circuits adopt the same framing, and whether any firm’s fee application is cut on evidence rather than inference. The opinion leaves that door open; nobody has yet walked through it.
