Law.com: The Token Cost Illusion — Falling AI Prices Won't Save Legal Department Budgets as Workflow Accumulation Builds Hidden Exposure

Law.com's Corporate Counsel column (August 3) introduced a concept with direct implications for law firm and in-house AI economics: the "token cost illusion." As AI model prices fall, legal teams and law firms are building increasingly complex AI workflows that accumulate cost exposure not captured in current budgets — and that will be "very hard to unwind" when the total cost lands. Unlike past technology cycles, the people incurring AI costs in legal (practitioners, associates, workflow designers) are often not the people asked to explain those costs at budget review. The implication is that the apparent low cost of AI access today is masking the aggregate cost of legal AI workflows being assembled across practice groups and departments. For legal operations directors and CFOs: this is the AI cost-management signal most underweighted in current planning cycles. Falling token prices create a behavioural incentive to deploy more AI use cases, not fewer — which means total spend rises even as per-unit cost falls. Legal departments and law firms that are not tracking actual AI workflow costs at the matter and practice level are building unquantified budget exposure.