Attorney Supervisory Responsibility for Trust Account Management in Remote Practice: Matter of Cohn

Introduction

Matter of Cohn, 2025 NY Slip Op 01627 (App. Div. 2d Dept. Mar. 19, 2025), is a disciplinary proceeding concerning Steven Cohn, an attorney admitted in 1975, who faced four charges of professional misconduct arising from the mismanagement of his two trust accounts and the misappropriation of client funds by a paralegal during the COVID-19 pandemic. The Grievance Committee for the Tenth Judicial District petitioned for disciplinary action; Cohn admitted certain facts but denied rule violations. A Special Referee sustained all four charges. On appeal, the Appellate Division confirmed the findings, imposed a six-month suspension, and elaborated principles governing attorney supervisory duties, trust account oversight, and remote practice in extraordinary circumstances.

Summary of the Judgment

The Appellate Division granted the Grievance Committee’s motion to confirm the Special Referee’s report, sustained all four charges against Cohn, and imposed a six-month suspension effective April 18, 2025. Charges included: (1) misappropriation of fiduciary funds (RPC 1.15(a)); (2) failure to supervise a non-lawyer (RPC 5.3(a), (b)(2)(ii)); (3) commingling of personal and client funds (RPC 1.15(a)); and (4) conduct reflecting adversely on fitness to practice (RPC 8.4(h)). The court considered the hardships of remote work during COVID-19, Cohn’s remedial measures, and character evidence, but concluded his lack of adequate oversight and reconciliation constituted serious professional misconduct.

Analysis

Precedents and Authorities Cited

Rules of Professional Conduct (22 NYCRR 1200.0):
- RPC 1.15(a) – Safekeeping property and prohibition against misappropriation and commingling.
- RPC 5.3(a), (b)(2)(ii) – Supervisory obligations over non-lawyer assistants.
- RPC 8.4(h) – Conduct prejudicial to the administration of justice or reflecting adversely on fitness.
Judiciary Law § 90 – Grounds and scope of attorney discipline, including the power to suspend.
Disciplinary precedents (general background, e.g., Matter of Hallock, 230 AD2d 83): similar supervisory failures leading to discipline.

Although the per curiam opinion did not cite an extensive list of prior cases by name, it followed established disciplinary practice by applying the Rules of Professional Conduct and weighing analogous decisions where lawyers were held accountable for paralegal theft and trust account mismanagement.

Legal Reasoning

The court’s reasoning rested on three pillars:

Fiduciary Duty and Misappropriation: Attorneys must hold client funds in a dedicated trust account and may only draw on them for proper purposes. Between July and September 2020, paralegal Kathi Ward issued five unauthorized checks totaling $50,140.64 against Cohn’s real estate trust account (1237 Account). Because Cohn failed to detect or prevent those transactions, the Special Referee correctly sustained misappropriation under RPC 1.15(a).
Supervisory Responsibility: Under RPC 5.3, lawyers must reasonably supervise non-lawyer assistants and ensure their conduct conforms to professional obligations. By isolating at home due to COVID-19, delegating full trust‐account control to Ward, and failing to secure periodic reconciliations once his mail‐handling intermediary fell ill, Cohn abdicated his supervisory duty. The court held that the exigencies of remote work did not excuse his failure to maintain adequate checks on Ward’s activities.
Commingling and Fitness to Practice: Earned legal fees appeared in both trust accounts during the period in question, constituting commingling. Cohn’s lack of awareness did not absolve him. Finally, permitting a subordinate to steal client funds without timely detection or reporting reflected adversely on his fitness, warranting a disciplinary sanction.

Impact on Future Cases and the Area of Law

Matter of Cohn underscores that:

Remote practice arrangements do not diminish an attorney’s core duties of trust-account management and staff supervision.
Periodic, documented reconciliations—even when working off-site—are indispensable safeguards against misappropriation.
When intermediaries (paralegals, office managers or third-party mail-handlers) are used, lawyers must confirm the integrity of processes and maintain direct access to account records.
Disciplinary bodies will weigh pandemic-related disruptions as mitigating factors, but they will not excuse fundamental failures to uphold fiduciary standards.

Future disciplinary matters will likely cite Cohn for the proposition that remote supervision imposes added rather than fewer obligations on attorneys managing client funds.

Complex Concepts Simplified

Misappropriation: When entrusted client funds are used for any purpose other than on the client’s behalf, even if later replaced by the lawyer, that constitutes misappropriation.
Commingling: Mixing personal or firm funds with client or third-party funds in the same account, which obscures the source and intended use of monies.
Fiduciary Duty: The highest standard of care imposed by law, requiring loyalty, prudence, and transparency when handling another’s property—especially money.
Supervision Under RPC 5.3: Lawyers must establish protocols, training, and oversight mechanisms to ensure non-lawyer staff do not engage in unauthorized conduct. “Reasonable supervisory authority” requires both personal involvement in and verification of tasks delegated.

Conclusion

Matter of Cohn establishes a clear rule: an attorney’s duty to safeguard client funds and to supervise non-lawyer assistants remains paramount, regardless of remote-work constraints. By confirming the Special Referee’s findings and imposing a six-month suspension, the Appellate Division reinforces that reliance on COVID-19 as an excuse for lax oversight is insufficient. Lawyers must maintain unbroken chains of custody for trust account records, perform timely reconciliations, and intervene at the first sign of irregularity. This decision will guide practitioners in structuring remote office protocols, training staff, and preserving the integrity of fiduciary relationships in an increasingly digital practice environment.