There is a growing chorus of voices in legal AI telling you to be very, very worried about the cost of tokens. Stanford says agentic AI uses 1,000 times more tokens than a chat query. Bloomberg Law says the subsidies are ending and the meter is about to start. A company called Portal26 just launched an entire product category — “Agentic Token Controls” — to cap your runaway AI spend before it eats your budget alive.
The message is clear: usage-based AI pricing is a ticking time bomb, and you had better lock in a flat rate while you still can.
I have spent the last few days stewing over an economic model of legal AI costs, and I think this narrative is almost entirely wrong. Not wrong about the facts — the Stanford data is real, the token multipliers are real, and yes, AI vendors are subsidizing current prices. Wrong about the conclusion. Wrong about what the numbers actually mean when you do the math instead of just reading the headline.
Let me show you.
Start With the Deal
Josh Kubicki’s recent Brainyacts briefing cites a case study from law.co — a mid-size corporate firm running M&A purchase agreement reviews through a five-agent AI chain. Before any optimization, the firm was consuming 3.2 million tokens per deal. At Sonnet rates, that is somewhere between $16 and $48 in raw AI compute.
The legal fees on an M&A purchase agreement review at a mid-size firm? Call it $50,000. That is a conservative round number.
So the AI compute cost was, at worst, one-tenth of one percent of the deal fee. Before anyone lifted a finger to optimize anything.
Now let us make it scary.
The 1,000x Scenario
The Stanford Digital Economy Lab found that agentic tasks can consume 1,000 times more tokens than simple code reasoning and chat. That is the headline number that launched a thousand LinkedIn posts about the coming token apocalypse.
Fine. Let us take it at face value. Multiply those 3.2 million deal tokens by 1,000 and you get 3.2 billion tokens. Assume a 75/25 split between input and output tokens, which is reasonable for agentic workflows that spend most of their cycles re-reading context rather than generating new text. At Sonnet rates, with no caching, no optimization, no discount of any kind, the naive cost is $19,200.
That is 38% of the deal fee. Now it sounds like a real number. Now the panic makes sense.
Except it does not. Because that calculation treats every token as if it costs the same, and in an agentic workflow, that is not how any of this works.Continue Reading The Token Cost Panic Is Wrong. Here Is the Math.







