Plexus partners face two-year lock-in as 30-strong team leaves group
Private equity investor Duke Street writes down its €30m investment in Parabis to zero as sale of Plexus to Keoghs looms
November 06, 2015 at 08:16 AM
4 minute read
Partners at defendant insurance law firm Plexus Law have been asked to agree to a two-year lock-in which could see them hit with financial penalties if they leave any earlier, with the news coming as Keoghs nears a deal to take over the business, Legal Week understands.
In addition to the lock-in Legal Week can also reveal that Plexus' parent company Parabis is set to see further lawyer exits and is looking to sell other parts of the business after its private equity investor wrote down its stake to zero.
It is not clear how many, if any, Plexus partners have agreed to the lock-in proposals so far or how much the penalties would be for leaving before the two years is up.
Lock-in agreements are often part of law firm merger contracts. In past deals financial penalties for breaking the lock-in have operated on a sliding scale depending on when the partner leaves and their equity level.
Partners in legacy firm Cobbetts agreed to a two-year lock-in when the firm was acquired by DWF in a pre-pack sale in 2013. Their partners faced penalties of up to £100,000 if they left early.
Legacy Barlow Lyde & Gilbert partners agreed to a three-year lock-in, that came with penalties of up to £180,000 for early exits when the firm merged with insurance-led giant Clyde & Co in 2011.
Further exits
The Plexus lock-in proposals come as two further partners and up to 30 more lawyers are set to leave Plexus' sister company Greenwoods Solicitors.
The team, which includes partners Simon Lindsay and Bilal Mizra and what is understood to be the firm's entire Southampton office, is set to join Horwich Farrelly.
They will join former Greenwoods senior partner Malcolm Henke, and partners Rod Evans, Jane Hall and Chris Crook who have all resigned to join Horwich Farrelly. Greenwoods' former head of counter fraud Karen Mann and former Parabis partner Jason Spencer joined Horwich Farrelly in September.
Private Equity News reported earlier this week that Parabis' buyout house investor Duke Street has written down its €30m (£21.6m) investment in Parabis to zero.
Duke Street led a round of investment in the business in 2012 and invested a further £13m in the group in December 2014.
The latest accounts for Parabis' ultimate parent company Trilliam Holdco, which owns Parabis Law and sister companies trading under the Parabis umbrella, show that it owed Duke Street and its co-investors through funds £52m on 31 March 2014.
The accounts also show Trilliam reported a pre-tax loss of £23.9m in the year to the end of March 2014. In the seven months to 31 March 2013 it reported a pre-tax loss of £2.1m.
In addition the accounts, filed in December last year, show Trilliam breached a number of banking facilities and covenants between April 2014 and the end of the year though these were subsequently waived.
Up for sale
It has also emerged that Parabis is in talks to sell its rehabilitation business, Argent Rehabilitation, and its loss adjuster businesses, Argent Liability Adjusters and Argent Property Adjusters, as part of an ongoing rectructuring being led by AlixPartners.
Loss adjuster Davies Group is in talks to acquire Argent Liability Adjusters and Argent Property Adjusters, as reported by Legal Week sister title Post in October.
Legal Week understands that Argent Rehabilitation is also being looked at by a number of potential bidders.
As revealed by Legal Week earlier this week Parabis is being advised on the restructuring of its business by financial consultants AlixPartners.
Plexus merged with fellow insurance firm Greenwoods in 2013. The firm closed its Bristol and Colchester offices in October 2014 and also embarked on a consolidation of its three London offices. In March Plexus lost a 13-strong travel law team to Kennedys led by partners Claire Mulligan and Justin Collins.
Meanwhile, in 2014 Parabis wound up the Croydon office of its claimant arm Cogent Law with the loss of 24 fee earners.
A spokesperson for Keoghs said the firm was "in conversation with Parabis Group regarding the acquisition of parts of the business" but that "no further details" could be disclosed.
Parabis, AlixPartners, Duke Street and Davies Group declined to comment. Horwich Farrelly did not respond to requests for comment.
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