For many, the collapse into administration of the Ince Group, the listed parent company of storied shipping firm Ince, was inevitable. A procession of public mishaps and falling revenue, combined with a string of high-profile partner departures, had left the future of the firm hanging in the balance for several months.
In April, following a drawn-out audit process for the financial year ended 31 March 2022, The Ince Group cited in a statement to the London Stock Exchange ‘increasing pressure on the cash flows of the business’, due to the length of the auditing process, as the push factor for entering administration. The audit is incomplete.
The Ince Group was informed by a major creditor that it would ‘no longer continue to support the business.’ In its statement The Ince Group said this gave the board ‘no choice’ but to enter into administration.
While the length of the auditing process may be the official party line, several former Ince partners spoken to for this piece were sceptical. One said: ‘Delays in the audit might have influenced the willingness of banks or other investors to invest, but I don’t think that can be the only issue. You also have to ask why, after several rounds of fundraising, the cash flow was so poor that it ended in this situation.’
‘As for what went wrong, it’s difficult to pinpoint exactly, but every business knows the importance of cash flow. A black hole is not formed overnight…’ Stephen Jarvis, Greenwoods
Stephen Jarvis, a former Ince partner and now head of corporate at Greenwoods, said: ‘As for what went wrong, it’s difficult to pinpoint exactly, but every business knows the importance of cash flow. Was it a perfect storm of recent events? While it is easy to blame recent circumstances and events, I suspect a deeper dive would reveal a lot more! A black hole is not formed overnight…’
When asked if the administration was a surprise, another former Ince partner said: ‘No, the writing has been on the wall for some time.’
An uneasy merger
The firm has experienced a dramatic deterioration in its fortunes in recent years. In 2019, a rescue deal saw listed firm Gordon Dadds acquire Ince as part of a pre-pack administration. Initially, the outcome appeared promising, with the firm enjoying an 87% increase in turnover in 2020 and 4% revenue growth in 2021.
However, behind the scenes, a culture clash between the two merger partners became apparent. One former partner was scathing: ‘[management] was also merging two polar opposite firms, a West End practice, which was a collegiate, happy practice, with Ince, where many of the partners felt they had been treated badly and were very unhappy.’
A lack of communication, and perceived underhand timing in the run up to the rescue deal, was also a cause of friction among Ince partners, according to several ex-partners.
‘They did [the deal] on 31 Dec 2018, the day before a public holiday. They [management, including then-chief executive Adrian Biles] had been talking to the Ince partners for about five or six months, trying to get them on board, but they left some very unhappy partners who didn’t know the admin prepack was going to happen. There was a significant fallout. The firm lost a number of partners at that point and more in the following months,’ recalled one former Ince partner.
Exacerbating the tensions were a slew of IT problems as Gordon Dadds took over the Ince network. This saw the IT system frequently crash for long periods, leaving fee earners unable to carry out billable work. As one former partner said, this meant: ‘Fee earners were haemorrhaging fee earning time.’
Adding to this, fee earners were expected by management to take on an ever-greater share of admin tasks, further reducing the time available for carrying out billable work. In an industry where each hour is broken down to six-minute units, every second of chargeable time counts.
Dramatic decline
Then in 2022 an embarrassing string of incidents saw Ince rarely leave the headlines. The year started badly, with a serious cyber-attack in March, causing an estimated loss of £5m to the business.
This was followed swiftly in May by the firm facing allegations of inappropriate behaviour by a group of its lawyers towards a 22-year-old waitress at a Cardiff restaurant.
This poor publicity coincided with the release of muted financial results the same month, which saw a 3% drop in revenue from £100.2m to £97m. The financial fall out of the cyber-attack, the war in Ukraine and the impact of Covid were all blamed for the slump. The former Ince partners interviewed agreed that the Ukraine war likely had a disproportionate impact on Ince’s finances compared to other major commercial firms, due to the significant disruption felt by the shipping industry. However, there was less sympathy for the positioning of Covid as a factor in its financial decline. ‘Covid, no. Bunkum frankly, Ince had the same issues that other legal businesses had to deal with,’ one former partner scornfully responded.
Summer bought no respite for Ince, with the firm acknowledging a pensions payment gaffe, seeing it pay pension contributions to the wrong account. The financial problems this caused led it to announce that to avoid ‘financial difficulties’ it would need to raise £8m.
Management issues became patently apparent, with the firm replacing Adrian Biles as chief executive with Donald Brown last July. In September, Biles was removed as a director of the company with immediate effect. Relationships between the Biles family and the management team were reportedly rocky, with some members of the management team feeling undermined.
The change in management to Brown and executive director Jennette Newman, was far from successful. As one former partner noted: ‘The business went from one set of management issues to another’, adding: ‘It was a very new management team, they were naïve about how to run a legal business, and neither had experience in that field before.’
Later in September, Ince settled claims with Biles and his father John Biles, the former head of Ince’s finance practice. The Bileses paid £670,000 to the firm and Ince paid £690,000 ‘relating to claims for loss of office, rent and other expenses’, with a further £15,000 ‘for loss of office and their interests in shares in the company’ to both.
October saw the firm divest its Gibraltar business, selling it to two employees for £700,000 in an attempt to shore up its finances. Then in November Ince announced that it was selling Arden Partners, which it had acquired less than a year previously for £10m. It sold the company for just £1m. The acquisition raised eyebrows at the time as Arden was Ince’s own corporate adviser. There was disbelief that neither Ince nor Arden appeared to appreciate that Arden needed to remain independent.
A people business
Compounding these events was a steady stream of partner departures. As one former partner said: ‘The firm lost a lot of partners; the biggest factor is its inability to keep key revenue generators at the firm. The cyber-attack did not help either.
‘The people could have been managed better, that is a key issue that was not properly addressed. The managing partner Brown, in particular, is not a people person, and it’s a people business. They should have had their arms all around the partners, and that didn’t happen.’ the partner added.
Another former Ince partner agreed: ‘With a law firm it’s the people that matter, so if you lose a lot of the people, it’s going to have an adverse effect financially.’
Existing teams were not always given sufficient recognition during the merger process. The public profile of the Gordon Dadds private client and family practices was given limited focus post-merger. ‘Gordon Dadds had a very good name for private client and family law. That was an important element. However, management didn’t listen to protests and dropped “Gordon Dadds” from the name of the firm. Potential private clients, and family clients, might hear about Ince then go on the website and think it was all about shipping. There was no word of mouth for Gordon Dadds anymore. It was a really good name, but the name had gone, and the team lost loads of work,’ said a former partner.
The series of unedifying headlines, combined with the difficulties of operating as a fee earner within Ince’s financial model, meant lateral recruitment to replace the flow of leavers was difficult.
What next?
Ince has filed documents with the court to appoint Quantuma as administrator, with the intention that The Ince Group’s business will be sold to a third-party purchaser as soon as possible.
If a buyer is found, changes will inevitably need to be made to the business model.
As one former partner noted: ‘They need a new management team. Can’t think why anyone would want to go with the existing management team.’
In a surprising turn of events, as the administration process kicked into gear, Adrian Biles has been linked to registering new companies: Ince & Co Law (incorporated 11 April), Ince & Co Legal (incorporated 11 April), Ince & Co London (incorporated 11 April) and Ince & Co UK (incorporated 10 April).
The Bileses have not publicly announced a return to the Ince brand.
Whatever comes next for Ince, recent developments have caused disappointment for many. Jarvis observed: ‘I read the news about Ince with great sadness; I was proud to be an international brand ambassador for the firm, with its rich 150+ year history. It was a great place to forge my career over 27 years and establishing an office in the Middle East was certainly one of many career highlights for me. Working with excellent lawyers, we delivered stellar deals for a portfolio of fantastic clients, many of which became friends. I wish the staff every success for the future.’
Another Ince partner concluded: ‘It’s a terrible shame, the partners and shareholders have been poorly treated. I think it would be an abysmal turn of events if the current management end up owning the business and assets. It would be a shocking dereliction of duty that they previously had to the partners and shareholders of Ince. It’s the result of mismanagement from the day Gordon Dadds acquired Ince & Co.’
Ince was approached for comment but did not respond.