8am Report: Hourly Billing Dominates Small Midsize Firms

• Hourly billing remains dominant among small and midsize law firms, with 48% billing exclusively hourly and only 10% using flat fees.
• The 8am SMB Law Billing and Payments Report, based on data from the first half of 2026, challenges the narrative of a widespread shift away from the billable hour.
• Small and midsize firms saw total billings increase by 5-8% monthly, driven by improved invoicing of recorded time rather than higher rates or hours.
• Collection rates slightly improved, with nearly 60% of firms reporting more invoices paid in full compared to the previous year.
• The report provides essential benchmarks for firms to assess their billing and collection strategies against current industry trends.

The emerging picture suggests firms are adopting more disciplined approaches, securing payments more reliably, invoicing a greater proportion of their earned time, and making deliberate choices regarding payment methods.

The professional business platform 8am recently released new data indicating that hourly billing continues to be the predominant method for small and midsize law firms, significantly outperforming flat fee arrangements. This finding from the 8am SMB Law Billing and Payments Report, published on Thursday, challenges common industry predictions regarding the obsolescence of the billable hour. Specifically, the report details that nearly half, 48%, of these firms operate entirely on an hourly basis, while only 10% exclusively utilize flat fees. A substantial 42% of firms employ a hybrid model, combining both hourly billing and flat fee structures.

Tanya Hendricks, 8am's chief product officer, highlighted the importance of these findings, noting that many firms make critical decisions about their billing and payment receipt processes without adequate benchmarks. She pointed out that while the industry narrative often suggests a widespread shift towards flat fees, the data from the 8am report hourly billing small midsize firms clearly demonstrates that most small and midsize businesses (SMB) have not adopted this trend. This discrepancy underscores the value of empirical data in guiding strategic choices for legal practices.

Analyzing billing and payment trends for the first half of 2026, the 8am report also revealed an increase in overall billings for small and midsize firms, though this was not driven by higher hourly rates. Across all firm sizes, hourly rates remained stable, with the exception of midsize firms, where rates saw some adjustment. Similarly, the average hours dedicated per case largely stayed consistent. The primary factor contributing to the rise in earnings was an enhanced efficiency in converting recorded time into client invoices, leading to a 3% to 5% increase in earnings per hour billed and a monthly total billing growth of 5% to 8%.

Furthermore, the small midsize law firm billing trends analysis indicated a modest but notable improvement in law firm collection rates for 2026. The data, compiled from over 60,000 firms utilizing 8am's MyCase and LawPay platforms, showed that nearly 60% of firms experienced a higher proportion of invoices paid in full, an increase from 58% in the preceding year. Concurrently, 26% of firms reported a reduction in past-due invoices, compared to 27% in the prior year. These figures suggest a positive shift in financial management practices within the sector.

The insights provided by the 8am SMB Law Billing and Payments Report offer a crucial benchmark for lawyers managing small and midsize firms to evaluate their own billing and collection strategies. Understanding these current industry trends is vital for identifying areas where practices can be optimized, ensuring alignment with successful financial models. The report's findings, particularly the flat fee arrangements vs hourly billing data, provide a factual basis for strategic planning, moving beyond anecdotal evidence or broad industry narratives.

As Tanya Hendricks articulated, the emerging picture suggests firms are adopting more disciplined approaches, securing payments more reliably, invoicing a greater proportion of their earned time, and making deliberate choices regarding payment methods. For firms seeking to improve financial discipline and operational efficiency, the detailed MyCase LawPay billing data within the 8am report serves as an invaluable resource for assessing performance and making informed decisions in a competitive legal landscape.

Lawyers managing small and midsize firms should use the 8am report's findings as a benchmark to evaluate their own billing and collection strategies, ensuring their practices align with current industry trends and identifying opportunities to improve financial discipline and operational efficiency.

Source: Original reporting via 8am's SMB Law Billing and Payments Report.