Houston changes to bail bonds threaten industry

I wrote recently that what I learned about bail bonds companies made me appreciate them, at least from my capitalistic that’s an interesting and possibly profitable way to make money perspective.

That doesn’t mean I’m deaf to other arguments, against the industry. Those arguments have gotten louder, to the point that bail bonds businesses in places like Houston and New Jersey face an existential threat right now. They may not survive.

A recent judge’s ruling is killing them in Houston.

At the end of April, Chief U.S. District Court Judge Lee Rosenthal ruled that all defendants accused of misdemeanor offenses in Harris County must be released from jail within 24 hours. The ruling went into effect this summer, pending resolution of a lawsuit, expected in October.

The practical effect is to make all misdemeanor defendants eligible for bail through county-supported pretrial services or a sheriff ’s bond, avoiding the need for a more costly private bail bond. The changes have eliminated 80 percent of the private bail bonds business, said John McCluskey of Action Bail Bonds in Houston. He believes his bail bonds competitors in Harris County have seen a similar catastrophic drop-off in their business. He said they’re pretty much dead.

Proponents and opponents of commercial bail bonds come to opposite conclusions about the proper role of private bail bonds vs. a so-called sheriff ’s bond, which are county-supported bail bonds that cost almost nothing.

Both sides agree on three key issues:

• Fairness: Is it fair that people are released from jail awaiting trial, or not, based on whether they can afford bail, or not?

• Public cost: Are taxpayer resources being used appropriately?

• Public safety: Do bail conditions adequately prevent accused criminals, awaiting trial, from recommitting crimes? And which method best guarantees that people show up in court to face justice?

What opponents and proponents don’t agree on is the data, how the other side uses the data, or what the data means. As a finance guy, public cost issue caught my eye in particular.

In conversations with three bail bonds owners in Texas, plus a fourth expert who has done consulting work for the industry, I heard them proudly represent a privatesector solution to the public-sector problem of ensuring court appearance for trial, thereby saving taxpayer dollars.

Requiring a defendant to pay for his release, bail bondsmen say, saves taxpayers from taking the financial risk of their return to court. The cost of monitoring defendants falls to bail bondsmen, not county employees. Finally, if a defendant fails to show up for trial, bondsmen say, the cost of collecting them doesn’t hit taxpayers.

In a narrow sense, taxpayer costs will go up in response to the recent shift to the public pretrial bail, the Houston Chronicle reported, as Harris County pretrial services hired a dozen new positions.

Mike Lozito, Bexar County’s head of pretrial services, estimates that he would have to triple his current staff of 71 to handle all bail cases if Bexar County went a similar route. Partly to avoid that additional public burden, Lozito told me, he welcomes the private/public partnership between pretrial services and the commercial bail bonds industry.

Yet, opponents of the status quo make bigger, and ultimately more profound, cost arguments.

As Matt Alsdorf of the Laura and John Arnold Foundation told me, the narrow cost issue of bail bondsmen vs. pretrial services does not accurately capture the true public expense of private bail.

As Vice President of Criminal Justice at the Foundation, a think-tank at the forefront of challenging the commercial bond industry, Alsdorf argues that we need to take into account the total cost of incarcerating people. Keeping penniless defendants in jail because they can’t post bail costs the public between $75 and up to $300 each night per person, depending on estimates and jurisdictions, according to Alsdorf.

U.S. Sen. Rand Paul, R-Ky., and Kamala Harris, D-Calif., argued in a recent New York Times editorial that 450,000 people sit in jails nationwide because they can’t make bail. They estimate this failure to afford private bail costs the nation an additional $14 billion per year.

Further, as Alsdorf points out, the impact of losing employment or disrupting families makes extra time in jail an economic catastrophe for people least able to endure that hit. That hit may appear justified to some people, because it punishes people who are arrested, but it also seems to encourage an ongoing cycle of poverty, which probably costs the public far more in the long run.

Could the Houston-area lawsuit spread to the rest of Texas?

As Bexar County’s public defender Michael Young explained to me, not right away, but maybe over time.

It’s true that there is a federal lawsuit pending in Harris County dealing with personal bonds and misdemeanors specifically. It is my understanding that the ruling is specific to the facts presented in that case, so therefore any ruling wouldn’t automatically be applied elsewhere. However, the legal reasoning of the federal judge could be applied to any county, and could result in a similar ruling, in future cases.

I’ll interpret this to say, over time, follow-up lawsuits could eliminate private bail bonds in cities and counties all over Texas. As private businesses they might be dead men walking and not yet know it.