New compliance obligations for client trust accounts: What attorneys and financial institutions need to know

Two new sections have been added to the Business and Professions Code - 6091.3 and 6091.4. These statutory amendments create new responsibilities for attorneys and banks, enhance regulatory oversight and ensure greater accountability in handling entrusted funds.

Obligations of attorneys to provide information to financial institutions

Starting Jan. 1, 2026, when establishing a new trust account, an attorney must use the State Bar's forthcoming, updated Notice to Financial Institutions form to provide their name and State Bar number to the financial institution. If a firm maintains the trust account, the law firm must designate one of its members as the designated licensee whose State Bar license number will be associated with the account. Attorneys and firms also have an ongoing responsibility to update the designated licensee information within 30 days of a designated licensee becoming inactive with the State Bar, becoming not eligible to practice law, or ceasing to be employed by or in practice with a firm. The completed form must be submitted to the financial institution in compliance with Section 684.115 of the Code of Civil Procedure. By July 1, 2026, attorneys and law firms must use the State Bar's updated Notice to Financial Institutions form to provide the designated licensee's name and license number to their financial institution for all existing trust accounts for which it has not already been provided. The form should be submitted to the financial institution under Section 684.115 of the Code of Civil Procedure and a copy of the form should also be taken to the local branch where the account is held.

Obligations of financial institutions to provide information to the State Bar

Financial institutions, including banks and credit unions, holding client trust accounts associated with California attorneys, must begin collecting and maintaining attorneys' State Bar license numbers of licensees associated with the trust accounts.

Additionally, starting March 1, 2026, and annually thereafter, financial institutions must electronically report to the State Bar, the following details for each attorney trust account:

• The name of the financial institution.
• The name of the attorney or law firm associated with the account.
• The account number.
• The attorney's State Bar license number.
• The trust account balance as of December 31 of the prior year.

Obligations of attorneys to provide records if selected for a compliance review

Business and Professions Code section 6091.4 requires that during the forthcoming compliance reviews and investigative audits, upon request from or at the direction of the State Bar, attorneys, law corporations, and limited liability partnerships must provide all requested information, records, or communications, including, but not limited to:

• Account journals
• Client ledgers
• Fee agreements
• Client files
• Billing statements related to the receipt, holding, and disbursement of funds entrusted funds or property
These records must be provided to the State Bar or its agents during the compliance review or investigative audit even if they contain information traditionally protected under attorney-client privilege, the attorney work product doctrine, or the duty of confidentiality. Compliance with these requests will not be deemed a waiver of these protections, nor will it violate the attorney-client privilege, the attorney work product doctrine, or the duty of confidentiality.

The big picture: While some banks have included the attorney's bar number in their trust account records, the practice has been limited to a few banks. This new reporting requirement will ensure all financial institutions are recording the bar number of the account holder. Providing the designated attorney's bar number to the State Bar allows for enhanced compliance and prevents non-attorneys from opening client trust accounts. The purpose of requiring attorneys to provide the updated Notice to Financial Institutions form is that financial institutions have not been including the attorney's bar number in their reporting to the State Bar. This has made it challenging and impossible in some cases for the State Bar to confirm compliance with the rules of professional conduct, identify account type errors, and ensure bank reporting is accurate and up to date.