Modhwadia: Practice shut down
The Solicitors Regulation Authority (SRA) may yet intervene in Axiom Ince, the law firm that now seems on the brink of collapse, it confirmed yesterday.
The regulator will also look at whether it should be doing more to oversee accumulator law firms.
The crisis was sparked last month by the SRA’s intervention into the practice of Axiom Ince global chief executive Pragnesh Modhwadia on the grounds that there was “reason to suspect dishonesty” on his part as well as breaches of other rules.
His practising certificate was automatically suspended as a result. The practices of two other partners were intervened in as well over suspected rule breaches.
At a recent High Court hearing, Mr Modhwadia reportedly admitted that about £64m had been taken from Axiom’s client account in part to buy Ince & Co and Plexus Law, and also buy six properties and renovate a further seven.
One of his solicitors told Legal Futures that Axiom Ince should have sufficient assets to meet the claims for the missing money.
Speaking at an SRA media briefing yesterday, SRA chief executive Paul Philip said there was not much he could say about the matter but conceded that there “appears to be a fairly blatant act of dishonesty”.
The SRA had “done everything it should have”, he insisted, explaining that it had probed the goings-on at the firm “because it is unusual for a small firm to take over a large firm”.
The SRA did not intervene in the whole firm last month “because it appeared to be a deliberate act of dishonesty and the other partners had nothing to do with it”.
However, he added, this “doesn’t mean it won’t happen in the future”. There are rumours that such a move could be imminent, with the firm said to be on the verge of closing its doors anyway.
Mr Philip said the regulator had begun to think about the potential impact of the events on the SRA’s Compensation Fund. As we reported recently, the fact of innocent partners may mean responsibility to cover any losses falls on the firm’s indemnity insurer instead.
Earlier this year, the SRA shut down another ‘consolidator’, or ‘accumulator’ firm, Metamorph Law. Mr Philip said the SRA board would actively investigate whether “we should be doing more in the future to deal with accumulator firms”.
What was then called Axiom DWFM was propelled from relative obscurity to big-firm status in April after buying listed firm Ince & Co in a pre-pack sale for £2.2m, which it followed up in July with Plexus, again in a pre-pack, for £1.1m.
Soon after the intervention, Axiom Ince announced that it was no longer taking new instructions and would “likely be unable to continue in its current format”, while lawyers have since started leaving the firm.
Yesterday, a team of seven regulatory lawyers from Ince & Co, led by partners Philip Somarakis and Colette Kelly, joined Irwin Mitchell, with the former becoming its national head of regulatory.
Today, a team of seven Ince marine and marine insurance claims specialists has joined Birketts, and more than 30 lawyers – led by nine partners – have joined insurance firm HF, with many of them operating a new Leeds office for the firm.
Further, a nine-strong team headed by Matthew Biles, previously head of private client and tax at Ince, has joined Greenwoods, following Roger Harding’s recent move from Ince to take up the role of head of tax and trusts.
Minutes of the most recent SRA board meeting, published today, said members agreed that “the deep dive on client protection which was scheduled for the October board meeting should include a review of recent significant interventions and any lessons that might be learnt from them”.
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