The Solicitors Regulation Authority (SRA) has taken control of Axiom Ince, shutting down the firm and appointing four law firms to manage client money and files.

The move follows yesterday’s application by the stricken law firm, which employs several hundred law lawyers and staff across the UK and overseas, to apply to the High Court giving notice of its intention to appoint administrators.

“An intervention means we have closed a firm with immediate effect,” a spokesperson said. “We will stop the firm from operating, take possession of all documents and papers held by the firm, and take control of all money held by the firm (including clients’ money).” 

While interventions into smaller firms are relatively common, this is likely to be the largest and most expensive intervention to date. 

The crisis at Axiom Ince was triggered in August when the SRA suspended its high-profile managing partner, Pragnesh Modhwadia, for suspected dishonesty. Two other directors were also suspended, for suspected breaching of solicitors’ practice rules.

At that stage the SRA said Axiom Ince, which this year bought out of separate administrations international shipping firm Ince & Co and national insurance practice Plexus Law, could continue to trade. 

The crisis intensified a few days later, when the firm secured a £64m High Court freezing order against Modhwadia over missing funds and issued a claim for alleged breach of fiduciary duty.

The SRA said today that the intervention followed “previous closures of the individual practices of Pragnesh Modhwadia, Idnan Liaqat and Shyam Mistry, former directors of the firm”.

John Owen, of Gordons, has been appointed the lead intervention agent for the SRA. His firm has been assigned former Axiom DWFM offices in Edgware, London, Birmingham, Bristol, Swindon, Walthamstow and Wanstead. 

Shakespeare Martineau is handling former Ince & Co offices in Bristol, Cardiff and London. Stephensons is the agent for Plexus Legal’s offices in Leeds, Liverpool and Manchester. Lester Aldridge is handling Plexus’s former southern offices in London, Chelmsford and Evesham.

“The agents will assess all on-going matters and deal with those of greatest need first. Our archive team will take control of all documents relating to closed matters held by the firm, such as copies of deeds and wills,” the spokesperson said. “We are not responsible towards employees or trade creditors of firms we have intervened in.” It declined to comment further.

The Law Society, meanwhile, updated an earlier statement issued on Ince’s administration expressing concern for trainees and future trainee solicitors facing uncertainty. 

Andrew Pavlovic at CM Murray said: “Having intervened in the practices of the three individuals, the SRA would have been hoping for an orderly closure, avoiding the significant costs that will be incurred in intervening in the firm itself.”

“Although we do not know the precise reasons, it was clearly felt that client interests could no longer be adequately protected by the firm. An immediate priority will be protecting clients’ interests with urgent matters. The SRA will also take possession of all money held by the firm, including the client account, which is known to be in deficit.”

Previous major interventions by the SRA include those of regional law firm consolidator the Metamorph Group, in 2022, which involved 11 legacy law firms; and legal aid firm Blavo & Co in 2015. The takeover of Blavo, which had 18 offices, cost £800,000, according to the Law Society Gazette.

Pavlovic said the costs generated by Axiom Ince could be higher.

“Alongside the costs of the intervention, there is also the potential for significant claims on the SRA’s Compensation Fund, given the size of the client account shortfall. It is not yet clear how this will all play out, but clearly, there is the potential for extremely high levels of costs being incurred, which the profession will ultimately meet.”

The fate of the freezing order litigation, meanwhile, remains unknown. GLP understands the decision on continuing the action remains with any remaining directors of Axiom Ince, although the SRA has a statutory right to ‘recover or receive’ monies, should it so wish.

One regulatory specialist said the SRA may take the view that the remaining directors are responsible for rectifying the shortfall, and they should continue the action and provide any of the sums recovered to the SRA.

Meanwhile, there has been a steady stream of team departures from the firm as its lawyers scramble to find new homes. 

The three suspended directors have denied misconduct.