Pragnesh Modhwadia had been riding high just six weeks ago. The managing partner of what had recently transformed into Axiom Ince threw a lavish party at a Mayfair club in London, far from the usual atmosphere of a City legal practice.
At the time, Modhwadia held the position of managing partner at Axiom, and he had successfully orchestrated the acquisition of Ince & Co, a once-prestigious shipping law firm that had been among the six legal service companies listed on the London Stock Exchange.
Under Axiom’s management, Ince & Co was delisted, and Modhwadia, 40, was filled with optimism about its future as a privately-owned entity, The Times reported.
Modhwadia’s confidence was so high that he brought lawyers from Ince’s international branches in Hong Kong, Shanghai, Dubai, and Cyprus for an uplifting gathering at the London Reign, a club known for its extravagant ambiance, complete with barmaids serving champagne in a stunning art deco-themed room.
Club managers had gone the extra mile, setting up translucent signs that seemed to hover above the dancefloor, bearing the message “Welcome back King Prag” strongly hinting that Modhwadia, had frequented the venue on previous occasions.
However, within the span of six weeks, the landscape of the competitive law firm acquisition scene shifted dramatically. In July, Axiom had also completed the acquisition of Plexus Legal out of administration.
Fast forward to this week, and Modhwadia found himself in the High Court, situated just a mile and a half from the London Reign, to confront allegations of defrauding his own law firm of £64 million.
A City source familiar with Axiom described Modhwadia as a charismatic figure who often embodied the “work hard, play hard” ethos. However, the same source lamented that the entire endeavor had unraveled into a chaotic situation.
Notably, a few weeks after the extravagant party and preceding his court appearance, Modhwadia, a solicitor since 2008, joined the ranks of three former partners at Axiom who faced suspension by the Solicitors Regulation Authority (SRA).
The SRA revealed that Pragnesh Modhwadia faced an investigation for alleged dishonesty, while Shyam Mistry and Idnan Liaqat were suspended due to suspected breaches of statutory rules governing solicitors’ accounts.
It has been confirmed that Mistry is in the process of appealing the SRA’s decision to suspend him.
When the regulatory intervention occurred, the remaining senior lawyers at Axiom swiftly reassured stakeholders by stating that the firm’s operations would continue uninterrupted.
They emphasised that the directors and partners had taken immediate measures to safeguard the interests of the business, clients, and employees. Prioritising the well-being of the latter remained their focal point while charting the best and most viable course forward.
Furthermore, they initiated High Court proceedings against Modhwadia, alleging “the misappropriation of very significant sums of money” from the firm.
This legal claim remains ongoing. However, officials at the regulator refrained from confirming at the time whether they were investigating fraud, leaving uncertainty regarding whether they had forwarded their findings to law enforcement agencies.
During the court proceedings this week, legal representatives for Modhwadia disclosed that approximately £64 million had been withdrawn from Axiom’s client account.
These funds were purportedly utilised, in part, for the acquisition of two law firms, as well as for the purchase of six properties and funding construction work on seven additional properties.
Regarding the investigation, the regulator refrained from providing specific comments on its details. However, they emphasised that the utilisation of client funds for a firm’s internal purposes was explicitly prohibited under the established accounting rules.
David Orchard, an attorney from the Brooke Consultancy, and one of the two solicitors representing Pragnesh Modhwadia, expressed Modhwadia’s belief that with proper management, there should be adequate assets available to satisfy the claims made by Axiom Ince Limited and other creditors.
Orchard emphasized Modhwadia’s commitment to full cooperation with Axiom, with the goal of securing the most favorable outcome for clients, creditors, and staff.
He also clarified that Modhwadia did not contest a freezing order on his funds, a detail revealed during court proceedings. Notably, Modhwadia’s assets have dwindled to a sum in the tens of thousands of pounds according to Law Society Gazette.
Jonathan Metliss, Axiom’s chairman, a highly experienced City lawyer with over five decades of expertise and a professed passion for business dealings, finds himself in a situation of considerable embarrassment due to the unfolding events.
Metliss, at the age of 74, holds a prestigious reputation in London’s financial district, boasting a career that includes advisory roles dating back to his involvement with the Beatles through his father’s accounting services.
Despite his illustrious career, Metliss, along with other senior figures at Axiom, has opted to remain silent in response to inquiries about the firm’s current challenges.
Critics argue that this episode not only reflects negatively on regulatory authorities but also on the partners at Pinsent Masons, the firm responsible for overseeing the regulatory aspects of Ince’s sale to Axiom.
Some maintain that both the regulatory body and the firm should have conducted more thorough due diligence before granting approval for the deal.
Requests for comments directed at the SRA and Samantha Palmer, the partner at Pinsent Masons believed to have managed Ince’s purchase from administration, have gone unanswered.