New York Senate Bill S04090

New York 2025-2026 Regular Session

• Introduced: 1/31/25
• Refer: 1/31/25
• Refer: 1/7/26

Caption

Prohibits a bank or trust company from charging a service charge or requiring a minimum balance for attorney trust or IOLA accounts that are non-interest bearing in nature; defines attorney trust account.

Summary

This bill would amend New York’s Banking Law to prohibit state-regulated banks and trust companies from charging service fees or imposing minimum balance requirements on attorney trust accounts, so long as the account is non-interest bearing or an IOLA account and has no more than 15 debit or credit transactions per month. It also defines an attorney trust account as a special account required by law or court rule for holding client or other third-party funds in the practice of law. The measure is aimed at protecting client funds held in lawyer trust accounts from being reduced by bank charges and balance requirements, which can create compliance and administrative problems for attorneys and law firms. The bill would create a specific statutory protection for these accounts and apply it to banks and trust companies regulated by New York State, taking effect 30 days after enactment.

Impact

If enacted, the bill would add a new section 9-e to the Banking Law and limit the ability of New York-regulated banks and trust companies to assess fees or minimum balance requirements on qualifying attorney trust accounts. It would directly affect banks, trust companies, attorneys, and law firms that maintain escrow, client trust, or IOLA accounts, while reinforcing existing rules governing the handling of client funds in legal practice.

Sentiment

Based on the bill text and available context, the measure appears to be straightforward and protective of attorneys’ handling of client funds, with no recorded committee debate or votes indicating opposition or support. The bill’s framing suggests a consumer-protection and professional-compliance rationale, and there is no evidence in the provided materials of significant controversy at this stage.

Contention

The main potential point of contention is the restriction on banks and trust companies, which would lose the ability to impose service fees or minimum balance requirements on a category of accounts that may generate administrative costs. On the other side, attorneys and legal professional interests would likely support the bill because it reduces the risk that client funds in trust accounts are diminished by banking charges and helps ensure compliance with court and ethical rules. No specific objections or supporters are identified in the provided transcripts or voting history.