Axiom Ince the recently-merged combination of London-based law firm Ince & Co with Axiom DWFM, has decided to close its doors after a misuse-of-funds scandal had enveloped the business, the second financial scandal to hit (separate) buyers of the Ince name in a couple of years.
The firm has no link to US-based Axiom Law, which has offices in London.
Axiom DWFM’s founder and previously managing partner Pragnesh Modhwadia has been accused of using $78m of clients’ funds to buy Ince and another law firm, Plexus, along with a portfolio of real-estate investments.
At the request of the UK Solicitors Regulation Authority, detectives from the Metropolitan Police’s Specialist Crime unit have launched an investigation into the allegations. No arrests have yet been made.
Axiom Ince has been reported to be losing staff at pace. Clients have apparently been told that the business will be winding down relatively quickly.
Ince & Co was founded in 1870 and grew to become one of London’s leading law firms with its reputation in maritime law being high. However, the danger of accepting apparently generous takeover bids from a company with a relatively short history has long been known in business. Four years ago it was acquired and merged into Gordon Dadds, but the new entity exploited the reputation of the Ince brand name, renaming the listed company as The Ince Group.
Gordon Dadds for a decade had undertaken an aggressive acquisition and consolidation strategy, buying up smaller firms and increasing its gearing.
Rapid growth was undermined after a series of Gordon Dadds-related accounting irregularities at its Hong Kong satellite office delayed the filing of its 2021-22 financial report several times. The share price fell, and key partners (ex the “original” partner-led Ince) began to defect to other law firms.
Many partners left Ince during 2022. Also, in September that year it was announced that the previous CEO Adrian Biles had been removed as a director of the company with immediate effect. Biles had announced on July 28th 2022 that he intended to step down as CEO and resign from the board, effective from the conclusion of Ince’s latest round of fundraising. That fundraising round was at a steep discount to the mid-market trading price at the time.
Apart from the Hong Kong situation, Ince referred to “historical accounting treatments” and “technical items”.
Come April 2023, four months after the delayed report was due, Ince announced that it had lost the support of a key lender, and that it was entering administration.
An independent administrator enabled Ince to sell to a competitor – Axiom DWFM. The deal was announced in early May, and Axiom DWFM became Axiom Ince. Earlier this year (IMN, May 2nd, April 14th) Ince & Co announced a “partner-driven transaction” to obtain legal business from The Ince Group plc. Ince Group was bought out of administration by UK law firm Axiom DWFM, which agreed to buy firm’s legal business and associated assets. The successor entity was known as Ince & Co, and continued to operate separately from Axiom DWFM, being managed as a separately branded legal services business, according to a statement from Ince’s legal team on Friday April 28th.
The law firm said that the transaction would allow the group “to refocus the firm’s growth strategy on its core legal services, whilst also improving operations and support structures”. All employees transferred into Ince & Co under their previous terms of employment.
Ince CEO Donald Brown said that the acquisition would give “a simple and clear corporate and capital structure under professional, knowledgeable and robust ownership”.
Axiom DWFM, a full-service legal practice with a network of UK offices, had as its managing partner Pragnesh Modhwadia, a practising solicitor.
But then another financial scandal struck. By the end of August, the UK Solicitors Regulation Authority had suspended Modwhadia and two more of the firm’s directors. Axiom Ince brought in accounting consultancy BDO to investigate. The firm believes that as much as $78m in clients’ funds may have been misappropriated in order to pay for the acquisitions of Ince and another law firm, Plexus.
Modhwadia’s former firm has filed a claim for breach of fiduciary duty against him, according to the UK Law Gazette, alleging “the misappropriation by Pragnesh of very significant sums of money.”