Plexus was confident.
Plexus filed accounts which misstated its turnover, profits, and headcount, and omitted multimillion pound transactions, it has emerged.
"During the preparation of the financial statements for the year ended 31 March 2020, the LLP discovered several errors in financial statements for the year ended 2019 ", Plexus conceded in its 2020 accounts, which it filed 11 months late last week.
The personal injury defendant firm's 2020 accounts reveal that in its 2019 accounts, Plexus:
- overstated its revenue by £1.4m, incorrectly recording revenue as £58m, not £56.6m
- overstated its profits by £1.9m, incorrectly recording a profit of £11m, not £9.1m, equivalent to an erroneous uplift of 20%
- overstated its debtors by £3.8m, incorrectly recording that it was owed £33.1m not £29.3m
- understated its creditors by £3.1m, incorrectly recording that it owed £8.9m, not £12m
Asked why RSM UK Audit was replaced as the firm's auditor in 2020, Plexus told RollOnFriday that, "Following the private equity investment in March 2019, PwC, one of the world’s leading accountancy firms, was appointed as the firm’s auditor and tax advisor".
The arrival of Origin Equity's £15m investment was greeted in 2019 with a fanfare of positive PR, and Plexus's then-Chief Executive Fiona Scott claimed that, unlike an IPO or merger, "This approach doesn’t compromise management control". It compromised her control, however, as within six months she was out of Plexus and Origin Equity's co-founder, Olivia Roberts, was the new Plexus CEO. A few months later, Senior Partner Andrew McDougall, who led the buy-out of Plexus when the Parabis Group collapsed in 2015, followed Scott out the door.
Plexus's 2019 accounts failed to include the large pay-offs which accompanied these shifts in ownership, including the fact that £13.5m was paid into Plexus by Origin, then paid out again to a company half-owned by McDougall. The transactions "were omitted from the 2019 accounts in error", the 2020 accounts state.
The sheer number of material mistakes suggests that someone involved in compiling Plexus's accounts was either wildly drunk or far worse at maths than they claimed. Plexus would not tell RollOnFriday who was responsible for the fiasco.
One of the most baffling mistakes saw Plexus record dozens more staff than it actually had, stating in the 2019 accounts that its headcount was 996, when it was actually 948.
Plexus also:
- incorrectly stated that its 46 equity partners were paid an average of £306k, rather than £260k, in 2019 (their income dropped to £106k in 2020).
- "incorrectly recognised" over £2 million of work it should have written off, "due to the requisite processes and accounting practices not being in place"
- omitted to disclose a "contingent liability for indemnities" payable to two employees, totalling £223k (the firm declined to elaborate on the reason for the payments)
- wrongly stated that Plexus was liable for £860k of property repairs if its leases were terminated
- failed to include details of an "Onerous Contract" which obliged Plexus to work for legacy Parabis Group clients for free, resulting in unrecoverable costs of £250k
One of the most startling admissions was that Plexus took £146k from a "customer" without issuing an invoice, and because it had "neither been billed to the customer nor recorded", the money never showed up in the accounts. "This treatment was not in line with the accounting policies of the LLP", said the firm.
Under the Companies Act 2006, directors are under a legal duty not to file false information with Companies House, and knowingly or recklessly delivering misleading or false information is a criminal offence. Plexus told RollOnFriday, "The firm has complied with all its regulatory obligations and the SRA is not investigating the firm in relation to these legacy matters".
Asked whether Plexus's claim a month ago that its accounts would “show that the business is in robust financial health, with a strong balance sheet and cash reserves" was accurate given the utter batshittery they actually revealed, the firm insisted that its 2020 results "show that the business is in robust financial health with a strong balance sheet, net assets of around £20m and net cash of around £4m. The firm’s profits of around £5m in FY20 have continued to grow into FY21 and beyond".
Plexus's accounts for 2021 are already a month overdue, and the holding company's 2020 accounts are now almost a year late.
Comments
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EP's paid £106k?!
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Seems that a number of people involved in this cock-up have been booted out. Quite right too by the sound of it.
Bye bye McDougall, Scott, RSM etc. I doubt those remaining at Plexus are shedding tears
Serious questions:
How on earth did RSM sign the 2019 accounts off as accurate? Seriously!!
Were these “innocently incorrect” accounts linked to the 2019 equity investment? Let’s face it, inflating profits doesn’t hurt the sell out value! The timing look suspicious.
If that’s happened, everyone who was involved will surely be at risk now. Who’d want to work with anyone involved with (or benefitting from) such a thing? Plexus are a firm of Solicitors after all said and done so integrity, honesty and having enough about you to know what you are getting involved in would surely be a requirement for continued employment/Partnership? Will be interesting to see which other Partners leave now the mess has been uncovered and corrected and the spotlight has been turned on.
One final point, you have to begrudgingly say well done to Plexus for uncovering and sorting this out. Clear out and move forward as the saying goes.
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It’s well know within the firm which Partners (4 individuals) made millions when Origin made the 2019 investment into Plexus. 2 have now voluntarily - ahem - moved into retirement and 2 others remain, and are probably feeling very happy with themselves and their enormous payday. Not sure it does much for team building though.
Wonder if RSM are now in the firing line, as signing the 2019 accounts off as accurate was clearly a joke. Surely that’s borderline Professional Negligence by a supposedly serious firm of accountants?
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Who are Plexus?
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The real question is, why does anybody work for Plexus? Unless you are really so utterly terrible at your job that nowhere else in the world would hire you, why would you continue to work for peanuts, with no prospects, for this bunch of chancers?
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This confirms my view on some of these investments/floats of law firms - one generation of equity partners receives a lot of money and then profits go down for those below them and no one really has proper career progression as in the old days at the firm. in this case there seem to have been some huge pay outs to equity partners and a vast number of mistakes with the accounting.
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Pretty sure one of the ROF forum members works at Plexus. Lol.
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Plexus in my opinion is a legal world sweat shop. Unpleasant management also.
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How many Ex employees come here for the comments 🤣
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Plexus, it’s like Lexus with “P”!
If the Lexus were a Reliant Robin.
With no engine.
And on fire.
And the owner grossly overstated its scrap value.
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This financial mess or financial mis-information is rather unfortunate but some EPs should have known better as they were burnt with the Halliwells collapse. I reckon some are worried now that they haven't been given the accurate financial position of the firm and have instead entered into another risky partnership deal which may take them on a similar path. Never mind some of those ex Halliwells lot weren't the nicest [or smartest] so very few people will be feeling any concern for their financial security.
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The usual apologists are hiding.
Tick tock, matter of time!
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Our Robin Reliant has five wheels. No, four. Oh, alright, 3. We can fit 27 people in it. No, 26. Hang on...
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The average of £106k is not even partner drawings, with tax and cotingency reserves, it's closer to £90k...
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Yet again the rule is - DON'T WORK FOR A LISTED LAW FIRM (caveat: Keystone won the best firm last year but it's a new model law firm so it's not comparable).
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Hmm wonder if they have now repaid furlough money! Or if they have now paid the coop staff what they owe!
ps. Was the large undisclosed staff payment in part to a convicted ex member of staff?
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Anonymous at 13:08
What makes you think that Plexus is a listed law firm?
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what is a plexus
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Some of these comments are actually really nasty
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Re: never tells...really nasty was working there with zero support and constant backstabbing. Worst career decision ever going there. Best career decision telling them to get lost and leaving to greener pastures.
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This is clearly a managed leak from our trusted leaders and owners at Origin, desperately scrambling to shore things up.
Are things really that different to the shambolic situation we found ourselves in back in 2015?
We’re all now left wondering how long Origin have been sitting on the knowledge these accounts were materially misstated, and what the 2021 accounts are going to reveal.
Brace! Brace! Brace! But now’s not the time for head down, stay down…
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Nasty? Save your tears for the creditors when the inevitable happens.
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Perplexed 19.55: expect you resignation on Monday.
If you are not part of the solution you are part of the problem. Think about that.
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Best of luck
Hope you are kinder to your new colleagues.
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@ perPLEXed Are you stupid? Look at the dates of the accounts that have been rectified and then when Origin invested. Then think about how long it might take to go back over the accounts and investigate anything that looks wrong and then resolve it and then republish the accounts. Think before you type.
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I see the haters still can’t resist coming back to hound us from beyond!
The thing is, a lot of people do like working at Plexus and have a good career. Every firm has some issues and someone doesn’t enjoy it at every firm, it’s just that the haters love to kick Plexus instead of actually moving on with their lives.
I’m personally glad you are happier where you are now. Can you now move on, please.
To Are You Kidding at 20.32 4th Feb: can you actually read a set of accounts and understand them? Plexus has a few million in cash and £20m on the balance sheet. It isn’t Linklaters- we get it - but that’s hardly a firm about to collapse. Net cash in the bank means Plexus is stable and profitable. There is no “inevitable” apart from in the prayers of the haters who want the firm to fail and harm the livelihoods of almost a thousand great people.
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There does appear to be an inevitability about this. Nobody has a good word to say about the firm or those now in control.
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I have lots of good to say about Plexus and the great people who work there, so 5th Feb 09.26 is wrong. It only takes 1 for it not to be universal 😉
The fact is that the current management are very well supported by many people internally, certainly by most of the Partners from what I see and hear, and they have dramatically improved the culture and communication. That journey continues.
I can’t deny that the gang of […] who milked the firm for every penny that they could in 2019 did not run the firm well, and are actively disliked by a great many colleagues/ex-colleagues (2 have left) for their actions, their inactions, their greed, their complicity, their silence, their weakness, their complete failure of leadership and questionable integrity, but the firm is moving forward and that, my friend, is what is happening whether you like it or approve, or not.
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There are some haters out there who keep trying to give Plexus a good kicking but those who like the firm, their colleagues and what they are building together will outlast the haters. The simple reason for that is that we get something positive out of our individual relationship with Plexus and the people there, whereas the haters only get to impose negativity onto the world. Most people tire of that eventually. This is the reason why we’ll outlast you.
To the haters: Why not focus your energy into something positive rather than simply stating over and over again a load of negativity, most of which is “anon” (no-one really wants to reveal themselves as a negative person), unsupported and very often plain wrong?
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Come into the real world. Totally and utterly clueless.
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Sounds like a lovely place to work. The people posting sound absolutely divine.
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Plexus management came 55th out of 61 in the Golden Turd survey.
Not many support the current management, then?
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Top tip for aspiring lawyers on the fiddle:I WP / ("AROC" = Amounts Recoverable on Contracts") is highly subjective and the best place to do it. Fall a little short on budget? Scrape a little deeper on what matters you can put into AROC
Also important to note that if you want to flatter your figures in 2020, make sure as little of the 2020 billings pertain to 2019 AROC.
Finally the amounts in question may well have been assessed on the edge of immaterial by the auditor. 3 percent of turnover is not an uncommon ratio for materiality.
Finally: it is more likely than not that your law firm does this. A culture (the culture of commerce really) that fetishises budgets more than actuals, even though in the real world actual revenue is always a guess, is a culture which makes this likely.
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It seems clear that Plexus is not a happy ship. Several of the comments above give a clear indication that current leadership and management is based on devisiveness. Not a good look to anyone reading this article and comments. Well done Origin.
Better the devil you know?
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Plexus Law - the only law firm in the world without an actual lawyer on its management board. You couldn’t write it. 🤡
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Centre of Excellence is wrong. Pure and simple.
End of discussion.
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Thank you to 9th Feb 11.29, but you are wrong.
The management Board is not lawyer free as claimed. It is very business focused, and experienced across the scope, and better off for the range of experience brought to the table
ps - the last deal (2019) was entirely run by 4 lawyers and look how crap they were/are at looking after the wider business !!
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We look forward to seeing Plexus and it’s FSMs (again) very soon.
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Plexus is (and always has been) the worst insurance practice in the UK. It's all about low fixed fees with very little return. This reflects in the quality of most of the staff and the quality of the work-poor.
Don't kid yourselves Plexus staff..it is what it is.
Will Plexus fold for a 2nd time? Would anyone be surprised if it did?
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And don't forget Plexus was spawned from the loins of BLM...so it was always off to a poor start.
Perhaps the 2 should merge?
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Thanks Gary (and friends @K),
Nice to see you care.
It is actually very interesting how many people wish Plexus to fail. It is as if our very existence winds people up. We’ve never understood it and we certainly don’t waste energy worrying about what you think.
I note that you think our work is poor quality. Quite sure our clients don’t agree 😀 I certainly don’t.
Lots of love xx
BTW - with £20m on the balance sheet and £4m in cash, Plexus is not going anywhere anytime soon. Sorry to disappoint. 😂😂😂
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After reading some comments on this thread I started to feel thoroughly depressed. I still work at Plexus.
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Remember, some people only value their worth in lots of £££s or meaningless titles.
While on the subject of £££s, it is clear that a couple of current Partners only value £££s and not what their Partners and colleagues think of them - we will remain a divided Firm/Partnership until something or someone gives. Any firm where Partner X takes home about £1.5m in one year and Partner Y take home £75k will always be divided. Most Partnerships have a 3x earnings from top to bottom of the Partnership. Plexus has 20-30x some years, and 100x on exceptional years.
Keoghs are as bad. Some Partners own racehorses, others make 80k. NOT a Partnership.
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Don’t get down. That is exactly what they want!
Remember who you are, what you do and who you work with. Stand proud and stay positive.
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Insider 17.24
I have no wish to see Plexus fail.
The existence of Plexus does not 'wind me up'.
I'm glad you don't waste your energy worrying about what I think.
However, this is a chat forum on a story about Plexus and my comments reflect my genuine opinions:
-The quality of work handled by Plexus is poor-mainly low value RTA, slip and trip, low fixed fees etc.
-The quality of work carried out by Plexus is poor-partly due to the above and because it can't pay for the best staff
-Plexus is (and always has) leading the 'race to the bottom'
-Clients don't rate Plexus... they appreciate Plexus doing low value / low quality work that they have no interest in for peanuts-
-£4m 'in cash' is not a lot for a firm of Plexus' size-about a month's running costs?
-Not sure what is meant by '£20m on the balance sheet'....sounds like some accounting BS to me and probably another expression for overdraft or loan.
-Will Plexus go under again? PEP of £100k in 2020 doesn't sound great. They've done it once I'm sure they can do it again...but who knows?
-Plexus failed once owing about £150m
-The same management team were somehow allowed to resurrect the beast
-If I worked at Plexus would I look for work elsewhere....it's a no brainer.
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Yes Gary, opinions.
Not facts.
There is a difference.
xx
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God Good, Gary A 10 February 22 14:13, how did you uncover my Evil Genius Master Plan?
Plexus never failed. It made £££ for those who count (er, maybe "count" is not what I meant. Whatever.)
Where there's brass, there's muck.
Plexus is dead. Long live Plexus.
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While there are many decent people amongst the rank and file at Plexus, I can't fault Gary A's logic.
He's got the right of it.
The founders surfed the wave of commoditisation of the law, rinsed, repeated and rinsed again.
Or is that a mixed metaphor? Dang it.