News focus: Meet the claims firm boss who owes $1bn

For a man with debts of $1bn, Tom Goodhead looks remarkably relaxed. In the boardroom of his 11th-floor City of London offices, the 41-year-old founder of collective action firm Pogust Goodhead told the Gazette of his enthusiasm for taking on corporate defendants, why the English courts need to up their game on complex cases – and how trainees at his start-up can earn £150,000 a year.

In just five years Pogust Goodhead has come from nowhere to 700 employees and offices in five jurisdictions. It has ‘26 or 27’ group litigation claims currently active, Goodhead said, ranging from a competition law claim against guitar maker Fender Europe to the mammoth England and Wales lawsuit against mining giant BHP over the Mariana dam disaster in Brazil, which the firm says could be worth £36bn. 

All this is done on the back of commercial loans, including a $552m (£454m) deal negotiated last autumn with US-based emerging markets investment manager Gramercy. The investment raised so far is the basis of the description of Pogust Goodhead as the legal sector’s first ‘unicorn’ – investment-speak for a startup valued at more than $1bn. Goodhead declined to use the term. However he said the firm’s performance had been more like that of a fintech startup than a conventional legal practice. ‘We’ve ridden the wave of litigation funding,’ he said. ‘We’ve grown and grown and grown.’

'This isn’t an NGO though I know we look like one. We are here to make a profit. I’m quite a free marketeer and we’re dealing with market failure to compensate for negative externalities'

Tom Goodhead

While he admitted that the prospect of being potentially liable for $1bn sometimes keeps him awake at nights – he is the firm’s only equity holder – he is confident that his investors are on to a good thing. The firm takes on claims only when the essential facts are not in dispute: the Fender claim, for example, is on the back of a £4.5m fine imposed by the Competition and Markets Authority over the company’s attempt to block discount sales.

The claims have also survived scrutiny by after-the-event insurers, he said. ‘These claims have gone through multiple magic circle assessments.

‘We don’t want cases in which there’s a big factual debate. We don’t want to be risking it on work we’re not going to win.’

For all that, Pogust Goodhead can expect a tough fight when the Mariana Dam case comes up in the High Court next year. The claim has already survived a jurisdiction challenge by BHP, which alleged it duplicated legal action in Brazil. It denies the claims in their entirety. The courts have also raised questions about the sheer manageability of the case, brought on behalf of 700,000 claimants.

‘There is a genuine fear as to the scale of this case,’ Goodhead admitted. ‘We are going to see quite active case management.’ He insists that England and Wales is a legitimate forum: there is ‘minimal overlap’ with the litigation in Brazil, he said.

However the courts of England and Wales will have to get used to this sort of case, he added. While a new generation of judges is ‘interested in group litigation and enjoying it’, the courts system itself is ‘definitely behind the times’. Goodhead is firmly in favour of establishing complex trial courts, on US lines.

Goodhead, a barrister who previously practised in personal injury and consumer claims, set up his firm in Liverpool in 2018 under the umbrella of US class action specialist Sanders Phillips Grossman. Its first case was the VW emissions claim, which ended with the car maker agreeing to pay nearly £200m to owners of cars fitted with ‘defeat devices’.

Goodhead cites Leigh Day and Irwin Mitchell as firms he ‘hugely admires’ – but says the difference with Pogust Goodhead is its ability to mount claims at a mammoth scale. ‘I’m the only equity owner in the firm so I can make decisions, traditional firms are not really set up for entrepreneurship.’

He is unashamedly commercial in his ambitions. ‘This isn’t an NGO though I know we look like one,’ he said. ‘We are here to make a profit. I’m quite a free marketeer and we’re dealing with market failure to compensate for negative externalities.’

He hires staff on the basis that, with bonuses, they will earn as much as their peers in City firms: I’ve got trainee solicitors earning 150k.’ And while the hours are ‘exceedingly long’, the cases are ‘fun stuff to do’.

He tells prospective employees: ‘You’re promoting access to justice by giving millions of people rights of redress.’