The firm behind the multi-billion-pound lawsuit against mining giant BHP is currently experiencing an exodus of key lawyers, as fallout within the law firm continues to unfold.
City-based law firm Pogust Goodhead, originally known as PGMBM before rebrand, is acting on one of the “most significant” group actions at the English High Court, representing over 600,000 people affected by the deadly 2015 Samarco dam disaster.
The collapse of the Fundão dam, operated by Samarco—a 50:50 joint venture owned by BHP and peer Vale—killed 19 people and stands as the worst environmental disaster in Brazil’s history.
After being initially rejected by the English High Court in 2020, a decision reversed by the Court of Appeal in 2022, the £36bn lawsuit against London-listed BHP went to trial last October. The ruling in the case has yet to be handed down.
However, while the parties await the court’s decision, turmoil has reportedly surfaced at Pogust Goodhead over concerns regarding US hedge fund Gramercy, the firm’s primary funder and the source of a £500m investment in 2023.
The Financial Times reported that the firm had suffered key departures before the landmark ruling, including its senior partner, Tom Ainsworth, who ran the BHP litigation.
It was noted that he removed himself from the case over concerns that the hedge funder was inappropriately involved in the firm’s operations and cases.
Meanwhile, another senior partner, Pete Gallagher, who was overseeing the firm’s Dieselgate litigation, a group action over car emissions, resigned due to similar concerns about Gramercy.
A spokesperson for the law firm said that it did not recognise the characterisation that Gallagher had resigned due to concerns about the funder.
The FT also revealed that this week, around 30 lawyers wrote to the firm’s board expressing concerns over a “lack of communication and transparency” about the reasons behind the leadership upheaval.
This follows reports last month that the hedge fund pushed out the firm’s former chief executive, and the man who lends his surname to the firm, Tom Goodhead. As reported at the time by the FT, chief operating officer Alicia Alinia took over the leadership position on an interim basis.
Goodhead still appears on the firm’s website and is still listed as its CEO.
Financial concerns
It was reported that some of the concerns in the letter to the board related to an alleged funding agreement between Gramercy and Pogust Goodhead, as reported by the FT, said the hedge fund provided a new $65m (£48m) credit facility last month.
Its financial woes were highlighted by the Law Gazette in April, which reported that the firm’s published accounts showed net debts of more than £500m, as auditors also flagged a ‘material uncertainty’ over whether the business can continue as a going concern.
Back in May, City AM reported that the firm was being sued for £2.2m over alleged unpaid legal bills by another law firm, Seladore Legal. Seladore worked on two retainers for Pogust Goodhead but alleged in the claim that it had not been paid any of the outstanding bills.
Commenting on the reports, Howard Morris, chairman of Pogust Goodhead, said: “The new board has acted decisively to strengthen the firm’s governance and to ensure a robust, transparent leadership team is in place. Our priority is to safeguard the best interests of our team and, above all, our clients.”
“It is unfortunate that some individuals are determined to undermine the significant progress that has been made to date and discredit our pursuit of justice on behalf of those who have lost so much.”
Any suggestion that our funders, including Gramercy, direct the firm’s strategic decisions or case strategy is entirely false. We remain fully independent, with complete control over the strategy and direction of every case we bring,” he added.