Escrow Account Records Missing

In Matter of Thomas, the Second Department accepted the resignation of an attorney under investigation by the Grievance Committee for the Ninth Judicial District. The investigation involved allegations of the willful misappropriation of client funds in the amount of $50,000 held on behalf of one client and $188,000 held on behalf of another client. In addition, the attorney had improperly made cash withdrawals from his escrow account and failed to maintain required bookkeeping records for this account.

As the court noted, the attorney was disciplined for, among other things:

“[F]ailing to maintain required bookkeeping records for his escrow account. The respondent further admits that there may be more client funds misappropriated or misapplied because he has not done a complete accounting of his escrow account. The respondent attests that he cannot successfully defend himself against the allegations based upon the facts and circumstances of his professional misconduct.”
2022 NY Slip Op 07240

In addition to having to resign his law license, the attorney was also required to pay $73,000 in restitution to his former client. Separately, he was ordered to “reimburse the Lawyers’ Fund for Client Protection of the State of New York … for any sum that the Lawyers’ Fund awards Osinubi or any other individuals who filed or may file claims against him.” Id.

Escrow Violations Are Serious

Escrow violations are the most frequent ground for attorney discipline in New York. An attorney can be disciplined for failing to spot misappropriations from their escrow accounts, even where the account was managed by another law firm partner or bookkeeper. And a bounced check will automatically trigger a report to the Attorney Grievance Committee and, in almost every instance, will lead to an audit covering the preceding six months of records. Likewise, discipline can be imposed even where no client is harmed when an attorney commingles personal funds with business funds.

Even if you have no books at all, and have never maintained accurate records, we can help quickly reconstruct your books and automate future processes.

Please note that the information provided on this website is for general informational purposes only and is not intended as legal or tax advice. The information is subject to change, and it is important to consult a specialist before making any decisions. Law Ledgers provides accounting services to New York lawyers and law firms, including escrow protection, tax advice and bookkeeping administration. Contact us today for personalized support.