What's happening
This bill prohibits New York banks from charging service fees or requiring minimum balances on certain attorney trust accounts.
Why it matters
Helps protect clients’ money. By prohibiting banks from charging fees or requiring minimum balances on attorney trust accounts, the bill aims to ensure that clients’ funds held by lawyers (often for real estate transactions or settlements) are not diminished by bank charges.
Supports smaller law practices and newer attorneys. Many solo or small-firm attorneys manage fewer transactions and might otherwise face disproportionate banking fees. This bill removes a financial barrier that can be especially burdensome for smaller or newer practices.
Preserves access and fairness in legal services. By reducing administrative costs related to managing client trust accounts, the bill could make it more feasible for attorneys to represent clients in lower-value or pro bono matters, promoting broader access to legal representation.
Clarifies protections for both IOLA and non-interest-bearing accounts. The bill explicitly applies to both traditional non-interest-bearing trust accounts and IOLA accounts (used to collect interest for public legal services), ensuring consistent protections across different trust account types.
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Who cares
Headline styles
Ban Fees on Lawyer Accounts
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to banks
- Referred to banks
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Ban Fees on Attorney Trust Accounts
In Assembly Committee · Banks · Sponsor Latrice Walker
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2712
2017-2018 Regular Sessions
IN SENATE
January 17, 2017
Introduced by Sens. PARKER, AVELLA -- read twice and ordered printed, and when printed to be committed to the Committee on Banks
AN ACT to amend the banking law, in relation to attorney trust accounts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The banking law is amended by adding a new section 9-x to read as follows:
§ 9-x. Attorney trust accounts. Notwithstanding any other provision of law or rule or regulation to the contrary, no bank or trust company regulated by the state of New York shall charge a service fee or require a minimum balance on an attorney trust account, provided that no more than fifteen debit or credit transactions per month are made in connection with such account and provided, further, that such attorney trust account is non-interest bearing or is an IOLA (interest on lawyer accounts) account. For the purposes of this section, an attorney trust account shall mean a special banking or checking account required by law or a rule of court for the deposit of funds belonging to law clients or other persons in the practice of law.
§ 2. This act shall take effect on the thirtieth day after it shall have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06177-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the banking law, in relation to attorney trust accounts
Purpose summary of provisions
This bill would add new section 9-x to the Banking Law to provide that no bank or trust company regulated by the State of New York shall charge a service fee or require a minimum balance on an attorney trust account, provided that such account is required by law and that no more than fifteen debit or credit transactions per month are made in connection with such account and further provided that such account is non-interest bearing. This bill would also define 'attorney trust account' as a special bank or checking account required by a rule of court for deposit of funds belonging to legal clients or other persons in the practice of law.
Justification
An attorney in possession of any asset or sum of money belonging to a client is a fiduciary and must not commingle client funds with his or her own funds or personal or business accounts. Furthermore, an attorney must maintain in a bank or trust company within the State of New York in his or her own name, or in the name of the firm of attorneys of which he or she is a member, a special account independent from his or her personal accounts.
In many areas of the state, banks require minimum deposits or service fees for the maintenance of these accounts. Such requirements can be financially burdensome to the small practicing attorney who handles only a few cases which would require the collection and deposit of clients' funds.
This bill would ameliorate this situation by providing that no bank or trust company regulated by New York State shall charge a service fee or require a minimum balance on an attorney trust account provided that such account is required by law and that no more than fifteen debit or credit transactions per month are made in connection with such account.
Prior legislative history
2015-16: S.2868A - Amend and Recommit to Banks 2013-14: S.3240 - Referred to Banks 2012: S.6216 - Referred to Banks
Fiscal implications
None.
Effective date
This act shall take effect on the thirtieth day after it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.