State Bar Launches Mandatory Client Trust Account Compliance Reviews

State Bar Launches Mandatory Client Trust Account Compliance Reviews

The State Bar of California launched its mandatory Client Trust Account Protection Program (CTAPP) compliance review today. Beginning September 29 through October 31, 2025, the State Bar will randomly select and notify 100 attorneys representing a cross-section of the attorney population to complete a CTAPP compliance review for reporting year 2024.

The first 20 attorneys are being notified today. Twenty additional attorneys will be notified each week over the following four weeks.

Prior to launching the mandatory program, the State Bar conducted a voluntary compliance review pilot to test procedures and received direct attorney feedback on the voluntary review. The State Bar issued an open call for volunteers in April 2024. Over 300 firms applied to participate, and 21 firms were selected to represent various practice sectors, firm sizes, and trust account recordkeeping methods. Voluntary compliance reviews began in February 2025 and were completed in August 2025. Eighteen firms completed the process.

"The voluntary pilot program gave us valuable insights that shaped the compliance review process, making it more effective for both attorneys and the State Bar," said Steven Moawad, Special Counsel in the Division of Regulation, which is in charge of CTAPP. "By launching the mandatory reviews, we're taking an important step toward strengthening client trust account practices statewide and deterring public harm before it occurs."

Compliance reviews are designed to evaluate trust account recordkeeping practices in several areas, including trust accounting records, compliance with notification and distribution time frames, supervision, and accuracy of records. Of the 18 firms that completed the voluntary compliance review process:

• 15 firms (83 percent) had noncompliant trust account journals.
• 16 firms (89 percent) had noncompliant client ledgers.
• 15 firms (83 percent) had noncompliant monthly three-way reconciliations.
• 10 firms (56 percent) had at least one client not notified within 14 days of receipt of funds.
• 8 firms (44 percent) had at least one occurrence of client funds not distributed within 45 days.
• 13 firms (72 percent) had deficient attorney supervision.
• 6 firms (33 percent) had at least one occurrence of attorney/firm fees incorrectly calculated.

At the end of the process, 100 percent of participating firms reported that they had a positive experience and were glad they volunteered. Participants agreed that the compliance review provided a meaningful assessment of their firm's trust accounting practices.

The voluntary pilot was invaluable to the State Bar team and led to programmatic changes for the mandatory program. These changes include the refinement of the scope of procedures, development of informational materials, clarification of milestones with automated reminders, issuance of preliminary findings reports prior to State Bar submission, and development of new practical trust accounting education ideas and practice aids.

All records and information remain statutorily confidential, including when attorneys provide any information, records, or communication requested as part of the compliance review. See Business and Professions Code section 6091.4.

Most compliance reviews are estimated to cost between $5,000 and $10,000, with actual costs affected by factors such as recordkeeping quality and responsiveness. The State Bar selected and trained the participating CPA firms. Additionally, the State Bar has created exemptions for those with annual gross incomes of $150,000 or less.

For more information, visit CTAPP Compliance.

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The State Bar of California's mission is to protect the public and includes the primary functions of licensing, regulation and discipline of attorneys; the advancement of the ethical and competent practice of law; and support of efforts for greater access to, and inclusion in, the legal system.