KPMG has just shown us the future of knowledge-work fee negotiation. A future where AI isn’t so much a tool as a cudgel. The firm leaned on Grant Thornton, its own auditor, demanding a reduction in audit fees to reflect cost savings supposedly unlocked by AI. Grant Thornton, initially defiant, insisted that “high-quality audits rely heavily on expert human judgment” and that fees represent “the cost of people plus technology support.” KPMG’s rejoinder, as reported by the Financial Times on 6th February 2026, was blunt: lower your prices or we’ll find someone who will.
Faced with this existential threat, Grant Thornton caved. The result? KPMG International’s audit bill fell from $416,000 in 2024 to $357,000 in 2025—a 14% haircut.
What just happened is the new operational reality: a real business, using the mere presence of AI as a negotiating wedge, extracted a real discount from a real counterparty. That wedge, once driven in, won’t be pulled out.
Notice what KPMG didn’t do. They didn’t automate the audit. They didn’t swap Grant Thornton for an LLM. They simply pointed to the new economic reality—everyone knows AI can do much of this work more cheaply—and used that knowledge as leverage. The threat wasn’t “we’ll replace you with AI.” It was subtler, and far more effective: “AI has changed the economics, so your old prices can’t be justified any more.”
This is the new professional services playbook—and it scales everywhere. If audit fees can be forced down by invoking AI, then legal fees are next. Then consulting. Then implementation. Then design. Any service where the bill is a function of human input is now exposed. The dominoes fall not because AI is universally deployed, but because buyers can simply point to AI and say: we both know the world has changed, so let’s talk about your rates.
KPMG aren’t waiting for AI to slowly transform their own operations. They’re wielding it now—not to automate their work, but to drive down the cost of the services they purchase. The mechanism isn’t technological disruption. It’s negotiation leverage, spreading invisibly but inexorably through the professional services economy—like a crack splintering across a frozen lake.
So, if you’re running a professional service firm of any size, what are you going to do about it? Resisting AI is futile. It’s here whether you like it or not. But are you using it to try and enhance what you’re already doing; things like writing emails, writing reports, or polishing PowerPoint slides? Or are you using AI to reinvent your business model and the fundamental way you work? If it’s the former, you’re in trouble, even if you don’t know it yet. The cracks are already under your feet.
If you want to turn AI from a threat into a competitive advantage—reimagining your value proposition, automating the right processes, and ensuring your expertise remains indispensable—then get in touch. But don’t leave it too long…
