Law Firm Bookkeeping in New York City
New York City’s legal market runs from large Manhattan firms to thousands of solo and small practices in Brooklyn, Queens, the Bronx, and Staten Island. Whatever the size, every New York firm that holds client money works under some of the most detailed trust accounting rules in the country. A&W Associates provides remote bookkeeping and escrow accounting for New York City law firms, and because our Florida office is on Eastern time, we keep the same business hours you do.
New York Escrow Account Rules
New York Rule 1.15 requires client funds to be held in an account titled “Attorney Special Account,” “Attorney Trust Account,” or “Attorney Escrow Account,” with that title on checks and deposit slips. Nominal or short-term funds go into an IOLA account, and escrow records must be kept for seven years. Entries are expected to be made at or near the time of each transaction, not reconstructed later. We record deposits and disbursements as they happen and reconcile each escrow account monthly.
Bounced Escrow Checks Are Reported Automatically
Banks that hold New York attorney escrow accounts must report any check presented against insufficient funds to the Lawyers’ Fund for Client Protection, which forwards the report to the attorney’s grievance committee. That happens even if the bank honors the check. Monthly reconciliation and accurate client balances are the best protection against an inquiry that starts with a simple timing error.
OCA Retainer and Closing Statements
New York personal injury and medical malpractice attorneys file a retainer statement with the Office of Court Administration when a client signs on and a closing statement when the matter ends. Medical malpractice fees also follow the sliding scale in Judiciary Law §474-a. We keep each matter linked to its OCA retainer number so closing figures match the escrow disbursements. See our personal injury and medical malpractice pages for details.
City Taxes That Affect Law Firms
Partnerships, LLCs, and sole proprietors doing business in New York City are generally subject to the city’s 4 percent Unincorporated Business Tax. Firms renting space in Manhattan south of 96th Street may also owe the Commercial Rent Tax once annual base rent reaches $250,000, although a small business credit eliminates it for many firms with income of $5 million or less and rent under $500,000. Payroll for city residents also requires New York City income tax withholding. We keep the records your CPA needs for each.
Real Estate Closings and Escrow Deposits
In New York residential deals, attorneys commonly hold buyers’ down payments in escrow until closing, and co-op and condo deposits can be large. We track every deposit by contract and confirm it is released only as the closing records show. Learn more on our real estate law firm bookkeeping page.
Practice Areas We Support in New York City
- Personal injury and medical malpractice firms
- Real estate practices handling residential and commercial closings
- Estate and Surrogate’s Court practices
- Immigration and employment law firms
- Solo and small firms across all five boroughs
Same Time Zone, Remote Service
We work with New York City firms remotely through cloud-based accounting and your existing practice management software, on the same Eastern-time schedule. Contact us to get started, or see our law firm bookkeeping services by practice area.
This page is provided for general informational purposes and does not constitute legal or tax advice. Attorneys should review the trust accounting rules applicable to their jurisdiction and consult appropriate legal counsel or a CPA when necessary.
