New York Supports Audit Program for Law Firm Financial Accounts
The Professional Discipline Committee issued a report in support of amendments to the judiciary law, directing the chief administrator of the courts to develop and implement a random audit compliance program. This program would allow periodic audits of law firm financial accounts and to amend the state finance law in relation to funding the program.
Law firms selected for audit would be required to provide records for trust accounts, business accounts, and fiduciary accounts. The audit would include a two-year review of records such as bank statements, cancelled checks, wire advices, deposit slips, client trust ledgers, check registers, and three-way reconciliations.
If A.10145-A (M. of A. Lavine) and S.9129-B (Sen. Bynoe) passes, New York will join California, Connecticut, Delaware, Iowa, Kansas, New Jersey, North Carolina, Vermont, and Washington as states with random audits for attorney trust accounts.
The Professional Discipline Committee concludes “This proposed legislation represents a meaningful and overdue step toward the protection of client funds in New York. We accordingly urge the Legislature to pass the bill, and the Governor to sign it into law” New York City Bar Assn., Professional Discipline Committee, Support for Bill Instituting a Random Audit Program for Law Firm Financial Accounts (May 14, 2026), available at https://www.nycbar.org/reports/support-for-bill-instituting-a-random-audit-program-for-law-firm-financial-accounts/.
A random audit program is not simply for discipline but for early detection of bookkeeping problems before they come more serious violations.
Why Ohio Lawyers Should Pay Attention
Ohio has already moved towards proactive protections with the Proactive Management-Based Regulation (PMBR), which became effective on January 1, 2025, requiring private practice attorneys to either maintain professional liability insurance or complete a free PMBR course. The PMBR course is designed to assist attorneys in developing ethical infrastructures to improve legal service delivery and client relations.
Many trust account problems are not the result of intentional theft. Some arise from poor systems, lack of monthly reconciliations, incomplete ledgers, improper handling of retainers or costs, or misunderstanding the difference between operating funds and client funds. Preventive review can help lawyers correct those issues before they become disciplinary matters under Ohio Rule of Professional Conduct 1.15.
Even though the New York proposal does not apply in Ohio, it is a reminder that trust account compliance should be treated as an ongoing practice-management responsibility. A lawyer should be able to answer basic questions at any time:
Can every client balance be identified?
Does the trust account balance match the total of client ledger balances?
Are monthly reconciliations being completed and retained?
Are earned fees transferred only when properly earned?
Are costs, advances, settlement proceeds, and disputed funds being handled consistently with Rule 1.15?
If the answer to any of those questions is uncertain, the issue should be addressed before a grievance, overdraft notice, or disciplinary inquiry occurs.
For Ohio lawyers facing questions about trust account compliance, IOLTA maintenance, disciplinary investigations, or professional responsibility obligations, Koblentz, Penvose & Froning, LLC can assist with ethics counseling and disciplinary defense.