The Lawyers’ Fund for Client Protection paid more than $10 million in 2017, the second-largest single-year payout in the 35-year history of the fund
Second-Largest Single-Year Payout by Lawyers’ Fund For Client Protection
Emphasizing the need for proper law firm accounting, the New York Law Journal reports that the New York Lawyers’ Fund for Client Protection, which reimburses clients who have suffered financial losses caused by lawyer misconduct, paid more than $10 million last year, the second-largest single-year payout in the 35-year history of the fund. The article noted that “[t]rustees of the fund are recommending specific proposals to detect and prevent further abuse, such as requiring banks to provide notice to the Lawyers’ Fund of any overdraft on an attorney trust or escrow account and prohibiting overdraft protection on such accounts by amending the rules of professional conduct.”
What is the Lawyers’ Fund?
The New York State Bar Association established the Lawyers’ Fund for Client Protection in 1985 to reimburse clients who suffer financial losses caused by attorney misconduct. The fund is financed by annual assessments on all attorneys admitted to practice in New York State and overseen by a board of trustees appointed by the New York State Court of Appeals.
The Fund aims to reimburse clients for financial losses caused by attorney misconduct such as embezzlement, theft, or conversion of client funds. The Lawyers’ Fund serves as a last resort after all other sources of recovery have been exhausted. It is not intended to compensate clients for damages arising from malpractice or negligence.
The Importance of Proper Accounting and External Oversight for Law Firms
Retaining an external accountant to monitor your books can be a wise investment for any attorney. For example, Law Ledgers provides valuable oversight and guidance to ensure that all financial regulations are being adhered to, and can help to identify and prevent any potential mismanagement issues. We can also provide assurance that the law firm is adhering to all financial regulations, which can give peace of mind to both the attorney and the clients. By working with an external accountant such as us, you can minimize the risk of facing disciplinary action and protect your clients’ trust funds.
The influx in payments from the fund highlights the importance of proper accounting for law firms. Not only is it a legal requirement, but it also serves as a crucial safeguard for both the law firm and its clients. Without proper accounting, it becomes difficult to detect and prevent financial mismanagement.
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.
