NYC Bar Association Report Looks at Trust Account Oversight Mechanisms

The New York City (NYC) Bar Association’s Professional Discipline Committee has a vital role in monitoring and evaluating the lawyer licensing and discipline process. It examines NYC attorney disciplinary agencies’ performance and practices, and delivers reports and rule and policy change recommendations to the Office of Court Administration and Appellate Divisions.

A particular focus is on regulations, rules, and statutes that help ensure proper attorney and law firm conduct. It also monitors the procedural rules underpinning the disciplinary system, and works jointly with the Committees on Professional Responsibility and Professional Ethics on ethics-related statutes. The Committee facilitates the NYC Bar Association’s Complaint Mediation Panel, which handles any type of client/attorney dispute not involving fees.

In July 2025, the Professional Discipline Committee issued “Evaluating Trust Account Oversight Mechanisms,” a comprehensive report looking at attorneys’ core duty of safeguarding client funds. Numerous states have regulations extending past rules of professional conduct, involving loss prevention and detection. These protect the funds contained within attorney trust accounts.

New York State has adopted a pair of common measures. One requires that insurers provide written notices to payment claimants when settling third-party liability claims. The other requires this type of written notice for banks’ dishonored check/overdraft notices. A third type of measure, involving the random auditing of attorney trust accounts, is less common, as it involves considerable expenses and logistics.

The NYC Bar Association report examines random audit programs within the context of their effectiveness in educating attorneys on best client fund guardian practices and in protecting the broader public against fraud. Benefits of the random audit approach center on effectively allocating limited disciplinary resources, as it’s impossible to audit everyone.

New York has been considering implementing such a program since the late 1980s, following the Supreme Court of New Jersey’s 1981 authorization of the Random Audit Compliance Program (RACP). In tandem with RACP, New Jersey has a strict rule of automatic disbarment in cases where attorneys knowingly misappropriate client funds. Permanent disbarment from New Jersey practice was also the rule in such cases until 2024, when the State Supreme Court Chief Justice set in place a narrow pathway to readmission. According to the report, the $18 million program has engendered a “culture of compliance,” as it proactively imposes attorney regulations. This has led to relatively modest awards, related to client funds’ thefts.

Other state programs examined in the report include those of Connecticut, North Carolina, Washington, Vermont, and California. The policy paper concludes that a random audit program would boost the efficacy of rules that are already in place within the First and Second Judicial Departments.

It also concludes that a random audit program is sorely needed, given rapidly rising reimbursement awards. As reported by the New York Lawyers’ Fund for Client Protection, in 2023, the state granted some 72 awards, representing $6.1 million in reimbursement payouts. The Annual Report of the Board of Trustees for Calendar Year 2024 reported a 90 percent increase in this amount to $11.6 million. Awards granted with these reimbursement payouts rose 31 percent to 94. The largest category of such awards was $9.9 million for reimbursed real property escrow losses, with thefts of settlement proceeds by attorneys accounting for $415,476 (the second largest category).

Simple Wills, Living Wills, and Health Care Proxies for the Elderly

The City Bar Justice Center’s Elderlaw Project focuses on delivering legal services that assist New York seniors in addressing health-related issues. Project organizers team up with volunteer attorneys in providing those with limited economic means with estate planning services such as simple wills, health care proxies, and living wills. They also assist in defining powers of attorney and in appointing agents that control the disposition of remains.

Taken together, such documents provide seniors a pathway of expressing wishes in advance, such that they can be legally fulfilled at a later date. Elderlaw Project volunteers sit down directly with seniors and also partner with local senior centers around the city in facilitating community presentations.

It’s important to understand the difference between various types of estate planning documents as one ages. The simple will, also known as a last will, provides directives on what to do with a person’s assets after their death. This helps avoid a situation of the state declaring one “intestate,” or without a will, in which case the decedent’s property is distributed according to state intestacy laws.

The will involves the testator, who drafts the document, selecting an estate executor, who oversees the process of carrying out the will’s directives during the probate process. The varied responsibilities here span maintaining financial records, gathering property, and ensuring that outstanding debts and taxes are paid out before the remainder is distributed to named beneficiaries in the manner stipulated.

With a living will, also known as an advance directive, the focus is not on the distribution of assets after death. Rather, it’s on medical care received by a person should they become seriously ill or incapacitated, and unable to clearly or coherently express their wishes. Elements of this document often include details on whether, and in what circumstances, the person wants the use of breathing or feeding tubes applied, as well as other life-sustaining medical treatments.

An attorney-in-fact represents the living will’s owner’s interests. Imbued with medical power of attorney, this named agent coordinates care with physicians, providers, and other professionals, as authorized by the preferences set out in the living will.

This ensures that one’s voice is heard, even when one cannot actively communicate end-of-life care and treatment plans. This can be essential when events such as a vehicle accident occur that leave one temporarily unresponsive or in a coma. It addresses situations such as when to apply CPR and the degree of medical intervention applied. It also informs the life one desires to live if one survives. Some people choose not to be tied to life-extended devices past a certain point of unresponsiveness or mental incapacitation.

The health care proxy stands as a distinct alternative to the living will. The latter typically lists medical treatments that are either wanted or not wanted, should one become terminally ill and not be able to make decisions. The attorney-in-fact then follows these directives.

The health care proxy names an agent who steps in and makes such decisions on one’s behalf when the physician determines that one is unable to make health decisions. Health care facilities and providers must then follow the directives of the agent to the legal limit established. This makes it essential to discuss end-of-life wishes in depth with the agent and stipulate any circumstances that limit the agent’s authority.

NYC Bar Helps Preserve Integrity of New York’s Legal Services Fund

In early 2025, the New York City Bar Association (NYC Bar) partnered with its state-level counterpart, as well as the Monroe County Bar Association and the New York County Lawyers Association, in preventing millions of dollars from being taken illegally from the Legal Services Fund.

Established by the state in 1983, the fund ensures that New Yorkers with financial need have access to civil court remedies in suits involving issues ranging from saving a family residence to gaining custody of a child. The majority of the assets in the fund come from interest on lawyers’ trust accounts, which accrues without expense to lawyers or clients, and without public taxpayer contribution.

The fund is guaranteed ownership of its own assets by charter. In 2024, the state made the unprecedented move of seizing $55 million from the fund for outside programs. This came at an unfortunate juncture where the “access to justice” gap has widened into what many describe as a “chasm.” Families of limited means are often unable to afford attorneys to handle civil legal challenges that are centrally important to their lives, including debt collection, guardianship, eviction, and foreclosure.

In response to the state’s move, the NYC Bar, its fellow bar associations, and the fund itself threatened a lawsuit that convinced Governor Kathy Hochul and the state comptroller to place the fund assets off limits from use in the general budget.