National insurance law firm Plexus Law is on the lookout for new investment after its existing backer refused to put more money into the business, it revealed yesterday.
This could involve a sale or merger of the 64-partner firm, which has six offices in England and one in Scotland.
Its 2021-22 accounts are overdue, according to Companies House. Its accounts for the 12 months to 31 March 2021 showed a profit of £1.9m on a turnover of £49m, down from £5m and £57m the previous year.
In 2019, Plexus announced a £15m investment from Origin Equity, seven years on from the Parabis Group – of which it was part – becoming the first law firm to be bought by a private equity business, Duke Street.
But the group was broken up in a pre-pack sale in November 2015, with Plexus returning to the ownership of its founders.
In a statement yesterday, a spokesman said: “Plexus was successful in securing additional funding from its investors in March 2023. This funding was needed due to the ongoing impact of serious financial irregularities discovered by management after Plexus was acquired in 2019.”
This led to the 2019-20 accounts significantly restating the previous year’s figures, all downwards.
The spokesman continued: “The terms of the new investment were subject to a number of conditions. Unfortunately, after a period of negotiation, we have been unable to broker the necessary agreements to meet all of those conditions.
“As a result, investor support has been withdrawn. Up until this point, the business’ underlying trading has been running in line with its forecast.
“In these circumstances, we are now looking to raise fresh funds for the firm from a new investor. This may involve a sale or merger of part or all of the business with another firm.”
The spokesman added that the firm was “committed to ensuring” that high standards for clients were upheld during the process.
The 2020 accounts said that the 2019 accounts overstated revenue by £1.4m (it should have been £56.6m) and profits by £1.9m (meaning they were £9.1m) among multiple errors.
They also revealed that on 29 March 2019, the vendors of Plexus, Andrew McDougall and Tim Roberts, received £13.5m from Origin, while also repaying £1.6m to Plexus. But then Plexus repaid £1.35m of capital to them in May 2019 and made a further £2.76m capital repayment on 31 March 2020.
At the time of the Origin investment, Plexus’s then chief executive Fiona Scott – who left at the end of 2020 – told Legal Futures that it was a different deal to that with Duke Street.
She said it was “not bringing debt into the business but bringing investment”. This meant that “if business takes a downturn, it doesn’t put the [firm] at risk. That’s why I say it’s a very different deal”.
Origin Equity partner Olivia Roberts is now Plexus’s chief executive.
Plexus had 900 staff as at March 2021. It has offices in London, Manchester, Leeds, Evesham, Chelmsford, Liverpool and Edinburgh handling over 70,000 claims a year. It says it has over 70 major corporate clients, more than 50 in the public sector and works for four of the top 10 motor insurers.