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Trust account discipline this fall: commingling, overdrafts, and Pennsylvania's plan to send bank reports to disciplinary counsel

September 2026 brought California disbarments over client funds, a Maryland disbarment that began with trust money paying personal bills, and a Pennsylvania proposal to route trust overdraft reports directly to disciplinary counsel. The patterns, and a seven-step checklist.

Published 5 min read

By Robert Pasha

September 2026 was a busy month for trust account discipline. California's State Bar posted multiple disbarments and suspensions tied to client funds. Maryland's highest court disbarred a solo practitioner whose trust account troubles began with personal bills. And Pennsylvania proposed sending bank overdraft reports on lawyer trust accounts straight to disciplinary counsel.

None of these cases involve exotic schemes. They involve the basics: money in the wrong account, money not paid out, and records that did not hold up. That is good news, because the basics are fixable.

What the September cases show

California

The State Bar's recent disciplinary actions list includes several trust-related matters with September 2026 effective dates:

  • A Los Angeles attorney disbarred effective September 4, 2026, for "intentional misappropriation of entrusted funds and misrepresentations to clients amounting to moral turpitude."
  • A Walnut Creek attorney disbarred effective September 25, 2026, for failing to deposit client funds in trust and failing to promptly pay out funds, among other violations.
  • A Dublin attorney given one year of probation and a 120-day suspension, effective September 25, 2026, for failing to maintain funds in trust, failing to communicate, and other violations.
  • An attorney given two years of probation and a one-year suspension, effective September 25, 2026, for failing to deposit client funds in a trust account, failing to refund fees, and failing to render accounts.

Maryland

On September 15, 2026, The Daily Record reported that the Maryland Supreme Court had disbarred a Montgomery County criminal defense lawyer. According to the report, after he opened a solo practice he commingled personal funds with trust funds and used trust money to pay his family's childcare provider. That led to a check to an expert witness being returned for insufficient funds. When bar counsel asked for an explanation, he blamed a bank fee that, according to the report, the bank said it never charged. The trial judge also found perjury on a separate issue.

The lesson is familiar. The overdraft started the inquiry. The misleading explanation made it much worse.

Pennsylvania's overdraft proposal

In a notice of proposed rulemaking, the Disciplinary Board of the Supreme Court of Pennsylvania, the IOLTA Board, and the Lawyers Fund for Client Security Board proposed amending Pa.R.D.E. 221 and Board Rules 91.173 and 91.174. Comments were due September 28, 2026.

Today, banks report trust account overdrafts to the Lawyers Fund, which sends the lawyer a letter requesting a verified written explanation, with documentation, within ten days. The Fund refers matters to the Office of Disciplinary Counsel in situations that include questionable transactions, a lawyer who does not respond or cannot fully explain the overdraft, or an explanation that involves earned fees being deposited into the trust account.

Under the proposal, the Office of Disciplinary Counsel would receive overdraft reports directly and perform the preliminary inquiry itself. The boards say that office has "the robust investigatory resources and access to information" to handle the work promptly. If adopted, a Pennsylvania overdraft would land first with the office that brings discipline.

Even if you do not practice in Pennsylvania, assume an overdraft on your trust account will reach someone with authority to ask hard questions.

California's compliance reviews are under way

On June 17, 2026, the State Bar of California announced it had begun notifying 400 randomly selected attorneys that they must complete a compliance review of their 2025 trust account records under the Client Trust Account Protection Program (CTAPP). That is up from 100 attorneys in 2025, the program's first mandatory year, after a voluntary pilot with 21 firms in 2024.

The reviews are performed by State Bar-approved CPA firms and CPA staff at the State Bar under Rules of the State Bar, rule 2.6. The State Bar says the records remain statutorily confidential. It also reports that bank-reportable insufficient-funds actions fell 27%, from 1,017 in fiscal year 2024 to 738 in fiscal year 2025. California attorneys manage more than $14 billion in client trust funds.

The patterns to avoid

  • Commingling. Personal or operating money in the trust account, or trust money paying personal or operating bills.
  • Earned fees left in trust. Pennsylvania's referral criteria single this out. Move earned fees out promptly, with a record of what was earned and when.
  • Client money not deposited in trust. Unearned advance fees and settlement funds belong in trust until they are earned or paid out.
  • Slow payouts and missing accountings. Several of the California matters cite failing to pay out promptly, refund fees, or render accounts.
  • A bad answer to a bar inquiry. An honest explanation with records is the only good response.

What to do this week

  1. Reconcile last month now. Do a three-way reconciliation: bank statement, trust account journal, and the total of your individual client ledgers. All three should match. If they do not, find out why before you do anything else.
  2. Look for negative client balances. A client ledger below zero means you paid out one client's money on another client's behalf, even if the bank balance looks fine.
  3. Sweep earned fees. Bill, document, and transfer what you have earned. Do not leave your own money in trust beyond any small amount your state's rules allow for bank charges.
  4. Check for stale balances. Find any client money sitting in trust after a matter closed and pay it out or account for it.
  5. Stop paying personal or operating expenses from trust. Not childcare, not rent, not a vendor who needs paying today.
  6. Prepare for an inquiry. Know where your bank statements, ledgers, and reconciliations for the last few years are. If you are selected for a CTAPP review or receive an overdraft letter, you want to answer quickly and completely.
  7. Use software that blocks the common mistakes. In LawMOR, for example, trust ledgers cannot go negative, the monthly three-way reconciliation can only be signed at a $0.00 difference, and a CTAPP review packet is one click.

This post is general information, not legal advice; check your state's rules on safekeeping client property.

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