Quarterly Pulse: AI Rules, Psychosocial Duties and Billing Shifts

Regulators continued to clarify expectations on AI use. Psychosocial safety is now an enforceable duty. And the billable hour is losing ground at a faster rate. Here is what moved in Q2 and what it means for your practice.

Regulators have caught up with AI use, and guidelines are now in place

AI does not change your professional obligations. It raises the scrutiny of how you meet them. Multiple Australian courts have now published binding or quasi-binding AI rules, and the message is consistent across all of them.

A number of courts have already handed down practice directions, including:

• Federal Court GPN-AI (16 April 2026) — AI use must be consistent with existing duties. Non-compliance risks adverse costs orders.
• NSW Supreme Court SC Gen 23 (3 February 2025) — Generative AI is restricted in affidavits and witness statements. A written confirmation is required.
• FCFCOA PD-AI (29 May 2026) — Practitioners must be able to explain how AI tools were supervised, with specific rules for sensitive family law material.

Notably, the High Court is yet to issue a Practice Direction on the use of AI. Overall, the clear takeaway is that AI "hallucination" is not a valid defence in any jurisdiction. You file the document, you own its accuracy.

Is workplace psychosocial safety now a legal obligation for law firms?

Yes. Victoria and NSW now require employers to actively identify and control psychosocial hazards such as excessive workloads, bullying, and incivility, not just have a policy about them. A wellbeing document on file is not compliance.

Victoria's OHS (Psychological Health) Regulations 2025 commenced 1 December 2025. NSW's Code of Practice is admissible as evidence of what compliance requires, and SafeWork NSW has had dedicated psychosocial inspectors active since March 2026.

The VLSB+C found 83% of Victorian lawyers experienced or witnessed uncivil behaviour in the past 12 months. Treat culture as a compliance obligation; the regulator already does.

How is AI changing legal billing in Australia?

AI compresses the time it takes to do routine work, which directly undermines hourly billing. A survey of Australia's top 162 firms found 87 per cent now offer clients a billing choice. MinterEllison cut its graduate intake from 104 to 72, citing AI absorbing routine work.

Fixed and capped fees still fall under the Legal Profession Uniform Law, and costs disclosure obligations apply exactly as they do for hourly rates. Price the outcome, explain it clearly, and ensure your disclosure is accurate.

What the profession is talking about

Six themes have dominated the profession's conversation over the last 90 days. Each is reshaping how firms recruit, price, comply and compete.

What is changing now, and what is next?