Axiom Ince should have sufficient assets to meet the claims for the millions in missing money, a lawyer for its global chief executive has said.
David Orchard was speaking following a High Court hearing at which, according to The Times, Pragnesh Modhwadia 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.
Last month, the Solicitors Regulation Authority (SRA) intervened into Mr Modhwadia’s practice 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.
Soon after, Axiom Ince announced that it was no longer taking new instructions, while lawyers have since started leaving the firm.
Last week’s hearing saw the court extend the preservation and freezing order imposed on Mr Modhwadia by Mr Justice Michael Green on 25 August after a without-notice application.
London firm Rustem Guardian is representing him regarding regulatory issues, while The Brooke Consultancy is acting on his behalf in the civil proceedings.
David Orchard, special counsel at The Brooke Consultancy and also a consultant at Rustem Guardian, said: “Mr Modwahdia’s position is that, properly managed, there are likely to be sufficient assets available to Axiom Ince Ltd and to him to meet the claims [made by the firm and other creditors].
“Mr Modwahdia will continue to cooperate fully with Axiom Ince Ltd and its advisors to achieve the best possible outcome for clients, creditors and staff.”
Axiom Ince issued its claim against Mr Modhwadia in late August 2023; the particulars of claim and initial disclosure were due the day after the hearing.
If there turn out to be insufficient assets, the question will then be who picks up the bill. The SRA Compensation Fund exists to handle claims arising from fraud and theft where cover from professional indemnity insurance is denied, although it is capped at £2m per claim, with a discretion to grant more.
Companies House lists Mr Modhwadia as the only person with significant control of Axiom Ince, but he is one of 16 current directors. A law firm insurer can only deny cover where all of the partners of a multi-partner firm either participated in or condoned the fraud; there is no suggestion that this is the case here.
In a recent case in which an insurer failed to exclude its liability for losses caused by the fraud of one partner in a two-partner law firm, Mr Justice Robin Knowles observed: “The point is for discussion, but I suggest it may surprise the client community, and the public, that insurance, which is part of a framework required for their protection, may protect them where one of two partners was dishonest but not where the insurers can show the second partner condoned the dishonesty of the first.
“I appreciate there are other parts of the overall framework that is in place for the protection of the clients of solicitors. However at least the question of sufficient transparency on the point just mentioned may be suitable for joint review by the Law Society and the SRA.”