Can a law firm let a nonlawyer staff member open escrow sub-accounts and move money between them and the master escrow account?
NY State Bar Ethics Opinion 1060: Delegating escrow sub-account tasks to a nonlawyer staff member
Short answer: A firm may authorize a nonlawyer staff member, under close supervision, to direct the bank to open escrow sub-accounts and to transfer funds from a sub-account to the master escrow account, provided that only a New York-admitted lawyer can authorize withdrawals from the master account and the supervising lawyer retains professional responsibility for the nonlawyer's conduct.
Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.
About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.
Plain-English summary
A law firm wanted a nonlawyer staff member to direct its bank to open individual sub-accounts under a master attorney escrow account and to transfer funds from any sub-account into the master account. The firm proposed strict limits: the nonlawyer could move money only from a sub-account to the master account, never out of it, and only at the direction of a New York-licensed lawyer; all distributions from the master account or any sub-account would require the express direction and signature of a New York-admitted lawyer (¶¶ 1-4).
The committee started with Rule 1.15(e), which requires that all authorized signatories on a lawyer special account be lawyers admitted in New York, and with the broader Rule 1.15 fiduciary duties for funds held incident to practice (¶ 5). It then turned to Rule 5.3, which requires a firm to adequately supervise nonlawyers and makes supervising or managerial lawyers responsible for a nonlawyer's conduct that would violate the Rules; the committee noted that holding client funds may call for a higher standard of care than other tasks (¶¶ 7-9). It reviewed Matter of Galasso, 19 N.Y.3d 688 (2012), where a lawyer was disciplined for ceding too much control of escrow accounts to a bookkeeper who misappropriated funds, stressing that delegation is allowed but must come with appropriate lawyer oversight (¶¶ 10-11).
Drawing on N.Y. State 693 (1997), which permitted a paralegal to use a lawyer's signature stamp on escrow checks under close supervision despite the signatory rule, the committee concluded that the two narrow tasks here could be delegated because the nonlawyer could move funds only into the master account and only a New York lawyer could authorize withdrawals (¶¶ 12-14). The committee emphasized that responsibility for client funds cannot itself be delegated and that the supervising lawyer remains professionally responsible under Rule 5.3(b) (¶¶ 13-15).
In practice
Under the New York rules as they stood at the time of the opinion, the committee permitted a firm to delegate two limited escrow tasks to a nonlawyer: opening sub-accounts and transferring funds from a sub-account up to the master account. The permission rests on two structural safeguards in the proposed setup: the nonlawyer can never move money out of the master account or to anyone, and only a New York-admitted lawyer can authorize and sign for any withdrawal, keeping Rule 1.15(e)'s lawyer-signatory requirement intact. The committee tied the delegation to Rule 5.3 supervision and the Galasso lesson that escrow delegation requires real lawyer oversight, not just review of staff-generated summaries. It underscored that responsibility for client funds is non-delegable and that the supervising lawyer remains accountable for the nonlawyer's conduct.
Common questions
Q: Can a nonlawyer employee open and manage attorney escrow sub-accounts?
A: Yes, within limits. The committee concluded a firm may authorize a closely supervised nonlawyer to direct the bank to open sub-accounts and transfer funds to the master account (¶¶ 14-15).
Q: Can a nonlawyer be authorized to withdraw funds from the escrow account?
A: No. Under Rule 1.15(e), all authorized signatories must be New York-admitted lawyers, and the committee's approval depended on withdrawals being authorized only by such a lawyer (¶¶ 5, 14).
Q: Who is responsible if the nonlawyer mishandles the funds?
A: The supervising lawyer. The committee stressed that responsibility for client funds cannot be delegated and that under Rule 5.3(b) the supervising lawyer remains professionally responsible for the nonlawyer's conduct (¶¶ 13, 15).
Background and rules framework
The opinion interprets New York Rule 1.15 (preserving client funds; the lawyer-signatory requirement in 1.15(e)) and Rule 5.3 (supervision of nonlawyers), corresponding to ABA Model Rules 1.15 and 5.3. The analysis turns on keeping every withdrawal under the control of a New York-admitted lawyer while delegating only ministerial transfers into the master account.
Citations and references
Rules of Professional Conduct:
- MR 1.15 / NY RPC 1.15(b), (c), (d), (e) (preserving client funds; lawyer-only signatories)
- MR 5.3 / NY RPC 5.3 (supervision of and responsibility for nonlawyers)
Cases:
- Matter of Galasso, 19 N.Y.3d 688 (2012), discipline for failing to supervise a bookkeeper who looted escrow accounts
Other opinions cited:
- N.Y. State 693 (1997): a paralegal may use a lawyer's signature stamp on escrow checks under close supervision
See also
- NY State Bar Op. 1077: Scanning and destroying original retainer agreements
- NY State Bar Op. 1114: Electronic signatures on trust-account checks
Source
- Landing page: https://nysba.org/ethics-opinion-1060/