Colorado bans flat fees and low hourly rates in certain cases

Pleading the Sixth: On June 6, Colorado Governor Jared Polis signed House Bill 1437 into law, prohibiting municipal governments from paying indigent defense attorneys flat fees and low hourly rates in domestic violence cases. This bill is part of a national trend toward abolishing flat fees and low hourly rates in favor of reasonable hourly rates. 6AC provides a breakdown of the latest attorney compensation rates nationwide.

On June 6, Colorado Governor Jared Polis signed House Bill 1437 into law, declaring that flat fee contracting “undermines the integrity of the criminal justice system” because they “financially disincentivize defense counsel for the indigent from zealously advocating for their clients.” In doing so, Colorado municipalities are now banned from using flat-fee contracts and low hourly rates to provide indigent defense services in domestic violence cases to ensure that “the interests of justice are best served.” This brings Colorado one step closer to providing a system that ensures constitutional indigent defense services in all case types.  

The Impact of House Bill 1437

Colorado funds two state agencies to administer indigent defense services in state courts. The Office of the State Public Defender (OSPD) provides primary representation with state government-employed public defenders, while the Office of Alternate Defense Counsel (OADC) provides conflict representation with private attorneys who are paid hourly. However, municipalities must provide counsel to every indigent defendant whose municipal charges carry a potential jail sentence. While some do so by creating their own public defender offices, contracting with OADC, or an hourly rate model, others choose to contract with private attorneys on a flat fee basis due to the lower price tag. House Bill 1437 changes this in municipal domestic violence cases.

National standards uniformly repudiate flat-fee contracts in favor of reasonable hourly rates. “Counsel should not be paid on a flat fee basis,” the American Bar Association explains in its Ten Principles of a Public Defense Delivery System, “as such payment structures reward counsel for doing as little work as possible.”

When an attorney is paid a fixed amount on a case regardless of the hours worked (i.e., $200 per misdemeanor case), there is no financial incentive for the attorney to spend hours on a case beyond the fixed amount because at that point, the attorney starts to lose money. The flat fee pay structure incentivizes less work for a higher return on every hour of work, creating a conflict of interest between the attorney’s financial interests and the client’s legal interests.  

Flat rates also pit indigent defendants against each other and against retained clients. Because counsel is compensated a flat fee per case, there is an incentive to take as many cases as possible to maximize income, often resulting in unsustainable caseloads. Moreover, private attorneys also take retained clients who pay at the private market rate. When an indigent client and a retained client both need counsel from the same private attorney, the private attorney is incentivized to spend time on the retained client’s case. The promise of the Sixth Amendment should not depend on a person’s financial situation. 

Colorado joins the national movement towards reasonable hourly rates 

With House Bill 1437, Colorado joins other states in banning or restricting flat fees:

• Idaho statute prohibits indigent defense contracts that “charges or pays a single fixed fee for the services and expenses of the attorney.”  
• The Nevada Supreme Court prohibits flat fee contracts that do not provide for investigation or expert services and extra fees in extraordinary circumstances.  
• The Michigan Indigent Defense Commission bans indigent defense contracts that have “any actual or apparent financial disincentives to the attorney’s obligation to provide clients with competent legal services.” 

Nearly three-quarters of states have established an hourly rate for trial-level adult criminal cases, including nine that solely use hourly rates (Arkansas, Hawaii, Iowa, Maine, Maryland, Massachusetts, Tennessee, West Virginia, and Wyoming). However, an hourly rate by itself may not prevent financial conflicts of interest; some hourly rates are too low to provide a “reasonable fee that reflects the cost of overhead and other office expenses,” as required by national standards, and some states impose maximum fee limits (“caps”), which effectively turn hourly rate compensation into a flat-rate model.