Invoice data from more than 60,000 firms shows flat fees losing a little ground. Billing grew because more recorded time reached the invoice.
The billable hour isn’t going anywhere at small firms. 8am, the company formerly known as AffiniPay, found in its first SMB Law Billing and Payments Report, released October 22, 2026 with data from more than 60,000 mostly U.S. firms on MyCase and LawPay, that 47.7% billed entirely by the hour in the first half of 2026, up from 46.6% a year earlier. Flat fees lost a little ground, and firms grew by billing more of the time they logged rather than by raising rates; as LawSites put it, reports of the billable hour’s demise are greatly exaggerated, at least at smaller firms.
How Many Small Firms Still Bill by the Hour?
Almost half bill only that way. Just 10.3% billed only by flat fee in the first half of 2026. The remaining 42% mixed the two, and more than half of those sent a quarter or fewer of their bills as flat fees. Measured by invoices, flat fees fell to 15% of all bills from 16%. Firms with 11 or more employees, which the report calls large, cut back the most, from about 16% to 14%. Solo firms were the exception, inching up to 17%.
The type of work decides the model. Flat fees made up 87.7% of invoices at traffic firms and 64% at immigration firms, both built on routine, bounded matters. They were 10% at business and corporate firms, 6.7% in civil litigation and 2.8% in family law. Immigration’s flat-fee share actually fell more than four points.
8am chief product officer Tanya Hendricks said in the company’s announcement, as quoted by the ABA Journal:
“All too often, firms are making consequential decisions about how they bill and receive payments without real benchmarks to measure against.”
If Rates Stayed Flat, Where Did the Growth Come From?
Monthly billings per firm rose 5% to 8% year over year, and higher rates were not the reason. Hourly rates were flat at three of the four firm sizes. Only firms with 6 to 10 employees raised rates, by 4.3%. What firms earned per hour billed rose 3% to 5%.
The report credits realization: more recorded time made it onto an invoice. Firms with 11 or more employees billed nearly 12% more hours while logging slightly fewer, raising the share of recorded hours billed from 44% to 49%. Solo firms went the other way, logging nearly 9% more hours while the share billed slipped from 70% to 69%.
Collections improved too. Invoices paid within 30 days rose from 57.7% to 59.1%, and the average unpaid balance fell from $2,073 to $1,979. But about seven in ten firms still carried at least one past-due invoice, unchanged from a year earlier. Firms charging a card surcharge rose 16%, and the report notes that some states prohibit surcharging.
How Far Can You Trust These Numbers, and What Do They Mean for AI?
Two limits matter. The data covers 8am’s own customers, which skews toward solo and small firms in consumer-facing practices, and 8am says plainly that it is not representative of the whole U.S. market. Its “large” firm has 11 employees, which is a long way from what most readers mean by large. In its favor, this is invoice data from tens of thousands of firms, which beats a survey asking lawyers what they plan to do.
Here’s what we keep coming back to. If most small firms still bill by the hour, most have not decided who keeps the time AI saves. The Law Society of England and Wales just said in its AI practice note that firms billing by time should not charge for the hours a task would have taken without AI, and U.S. clients will read that too.
What Should Your Firm Take From the Report?
If you’re a solo, you logged more time last year and billed a slightly smaller share of it. Before raising rates, check how much recorded time never reaches an invoice; the report gives the same advice.
At a small or midsize firm, the data points toward pricing by matter type: flat fees thrive where work is predictable and bounded, and stall where it is not. In-house legal ops teams buying from small firms can use these practice-area numbers as a reference point when they ask for fixed fees, and should expect pushback in litigation and family matters, where flat fees are rare. Large law firm finance teams will find little here, since the sample and the size bands do not describe them.
We rate the headline Real: the hourly model is staying put at small firms, and the growth came from billing discipline while rates held flat. Who keeps the time AI saves is the pricing question every small firm will face next.
FAQ
What data is the 8am report based on?
Billing and payment data from more than 60,000 law firms, mostly in the U.S., using MyCase and LawPay, comparing the first half of 2026 with the first half of 2025.
Is the billable hour dying at small firms?
No. As LawSites put it on October 22, 2026, reports of its demise are greatly exaggerated, at least at smaller firms.
Where do flat fees work best?
Where work is predictable and bounded. They are rare in litigation and family matters.
Does the report describe large firms?
No. The sample and size bands do not describe large law firm finance teams.
*Updated Oct 23 to refresh the story and add an FAQ.*
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