Where UK consultancies are quietly losing hours to fixed fees and IR35

Consultancies are winning more fixed-fee and retainer work than they used to. Clients like the budget certainty; procurement teams increasingly ask for it by default. That shift is good for cash flow. It is quietly terrible for admin, because a fixed fee does not reduce a client's appetite for visibility - if anything it increases it, since they are no longer paying by the hour and want to see exactly what that fee is buying.

At the same time, most boutique and mid-sized consultancies scale delivery by bringing in associates rather than hiring permanently. Since the off-payroll working rules (IR35) were extended to medium and large private-sector clients in April 2021, that has added a paper trail nobody bills for. The determination itself is the client's job: they decide whether an engagement sits inside or outside the rules, issue a Status Determination Statement, and pass it down the contractual chain to you. What lands on the consultancy is everything around it - chasing the statement when it does not arrive, passing it on, and, where you are the firm paying the associate's own company, operating PAYE and National Insurance on that payment as the deemed employer. Your own headcount does not change that: the small-company exemption applies to the client, not to you.

Neither of those pressures shows up on an invoice. Both of them land on the same desk: the partner or senior consultant who is meant to be billing, not filing.

Where the hours actually go

Across the consultancies we assess, the same four clusters tend to eat the week, in roughly this order of size:

• Client status reporting and steering decks. On a fixed-fee or retained engagement, the weekly or fortnightly update is the client's main window into progress. Pulling notes together, building the deck, chasing two or three team members for their piece - typically 2 to 3 hours per active engagement, every week, none of it billable.
• Call prep before every client meeting. The last three emails, the plan, last time's notes, the background on who is joining. Roughly 30 to 45 minutes of unbilled reading before every billed hour, which on a busy week compounds fast.
• Off-payroll paperwork and associate onboarding. Chasing the client's status determination when it does not arrive, passing it down the chain, and setting up payroll where you are the firm paying the associate's company - typically an hour or two per associate, repeated every time a new engagement or a new associate joins one.
• The senior-consultant inbox. Client threads, internal escalations, partner queries, business-development follow-up - commonly 90 minutes a day for anyone senior enough to be copied into everything.

None of these tasks is dramatic on its own. Stacked across a week, in a mid-tier consultancy billing around £110 an hour, that unbillable load is often the difference between a partner working a sane week and one that runs into the evenings - and it is the reason engagements that would be profitable on paper feel tight in practice.

What is safe to automate, and what genuinely is not

This is where consultancy admin differs from most other sectors we assess: the confidentiality bar is higher, and one of the four tasks above has a legal determination sitting inside it.

Safe to hand to AI, with the right setup:

• A first-pass client status deck drafted from team notes and a project tracker, so a human is editing rather than starting from a blank page.
• Meeting prep, built from a transcript-and-summary workflow off a business-account transcription tool such as Otter.ai or Fireflies.ai, so the ten minutes before a call replaces the forty-five.
• A prompt library for the inbox replies a senior consultant writes most often - status chases, scheduling confirmations, the standard BD follow-up.
• A first-draft summary of the engagement's known facts, ready to send to the client whose determination it is - and, once their statement arrives, the onboarding and payroll set-up that follows.

Not safe to hand off:

• The IR35 status determination itself - which is not yours to make. The client decides, issues the Status Determination Statement and passes it down the chain. Your job is to check it arrived, pass it on, and understand what it means for how you pay the associate. Where you are the firm paying their company and the statement puts the engagement inside the rules, you are the deemed employer: PAYE and National Insurance apply, whatever your own headcount.
• Client confidential material going anywhere near a consumer-tier AI tool. We only ever recommend business or enterprise plans that keep inputs private and do not train on them - the assessment flags exactly which of your existing tools already meet that bar and which do not.
• Final client-facing pricing or scope decisions on a proposal. AI can draft the boilerplate 80%; the judgement on what to offer and at what fee stays yours.

One task, before and after

Take the weekly client status report on a single mid-sized retained engagement. Before: a partner spends roughly two and a half hours pulling last week's notes together, chasing two team members for their updates by email, and building the deck from scratch in the client's preferred format.

After: the internal Monday catch-up gets recorded and transcribed through a business-account tool, an AI drafting step turns that transcript plus the project tracker into a first-pass deck in the client's template, and the partner spends around 30 to 40 minutes reviewing, correcting the framing, and adding the judgement calls only they can make. The team members stop being chased for written updates because the transcript already has what they said out loud in the meeting.

That is roughly two hours a week back, on one engagement, from one workflow. Run that pattern across three or four live engagements and the arithmetic changes what a partner's week actually looks like - without cutting the client's visibility at all; if anything the report gets more consistent because it is built the same way every time.

Find your own number

Your consultancy's mix will not match this exactly. Maybe status reporting is lighter but you run more associates through IR35 checks than most. Maybe your call-prep load is heavier because your engagements involve more stakeholders per client than average. The four clusters above are the usual suspects; where the actual hours sit, and in what order they are worth fixing, is specific to how your firm delivers.

If you want a fast, free read first, the HoursBack AI Readiness Quiz takes about two minutes and flags where the friction is highest before you commit to anything. To put a rough number on what unbillable admin is costing your consultancy right now, the admin cost calculator for consultancies uses your own headcount and rates rather than an industry average.

For the fuller picture, a HoursBack AI workflow assessment for consultancies is a 60-minute diagnostic of exactly how your firm delivers, followed by a report within two working days: named tools, step-by-step recipes, and a plan prioritised by hours reclaimed. It is not a tool list. If your report does not show at least 5 hours a week worth reclaiming, the £799 comes back. Related reading: our piece on where proposal writing time leaks in UK consultancies covers the front-end sales admin this post does not touch.

Book the assessment, or start with the quiz. Either way, the point is to see where your hours are actually going before you decide what to change.