COFA banned for using disbursement payments to prop up firm

Disbursements: Money taken was eventually replaced

A compliance officer for finance and administration (COFA) who helped the firm’s owner use £500,000 received for disbursements to prop up the firm has accepted a ban from the profession.

Philip John Kelly worked at Rowley Dickinson in Salford – which closed on 30 April – and admitted not telling the Solicitors Regulation Authority (SRA) that the firm was in financial trouble.

Under a newly published regulatory settlement agreement, Mr Kelly accepted the SRA making an order under section 43 of the Solicitors Act 1974, which means he cannot work for any body regulated by the authority without its permission.

Earlier this month, Alan Joseph Fitzpatrick, the firm’s managing director, was struck off by the Solicitors Disciplinary Tribunal. The reasons have not yet been published but the SRA has confirmed that the case was linked to the events described in Mr Kelly’s agreement.

The agreement said Mr Kelly became Rowley Dickinson’s COFA and accountant in January 2013, reporting to the firm’s owner.

“In 2014, the firm started to encounter financial difficulties. Mr Kelly agreed with the firm’s owner that they would use money it received to pay professional disbursements to meet the firm’s day-to-day business expenses, which included paying salaries and the owner’s drawings. Mr Kelly, as COFA, did not report the firm’s financial difficulties to the SRA.”

The money was transferred from client to office account and cheques were drawn to pay it out, but they were not actually sent, even though Mr Kelly recorded the payments to give the impression that the money had been paid. In all, the some £485,000 was misused.

The firm reported to the SRA what it had done in May 2019 and replaced the shortage on client account by December.

Mr Kelly acknowledged his misconduct and apologised for it, the SRA said.

The agreement went on: “Mr Kelly’s conduct makes it undesirable for him to be involved in a legal practice because it demonstrates a propensity to use client monies which are due and owing to third parties for other purposes and it shows that he is either unwilling or unable to comply with his COFA reporting obligations.”

In the spring, national firm Simpson Millar announced that it had acquired Rowley Dickinson’s personal injury work.

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