Class action specialists secure biggest ever law firm financing deal

Goodhead: Deal will transform our business

Pogust Goodhead has set its sights on becoming the biggest consumer class action law firm in the world after unveiling a landmark $553m (£453m) financing deal.

It hailed the corporate deal finance deal with emerging markets investment manager Gramercy as the largest investment in a law firm globally, as well as the largest single investment from Gramercy to date.

Chief operating officer Alicia Alinia told Legal Futures: “We want to be largest consumer class action law firm in the world and this is a big step forward to that goal.”

Pogust Goodhead – which said it was “following a trajectory more like a fintech start up than a traditional law firm” – only announced a £100m funding deal with alternative investments firm NorthWall Capital in July 2022, in addition to an initial £45m funding line, which was targeted at litigation arising from environmental, social and governance (ESG) issues.

Ms Alinia explained that this cash was allocated to specific cases, and the firm also had backing from other funders in the UK and Brazil.

According to NorthWall’s solicitors, Brown Rudnick, Gramercy’s loan refinanced NorthWall previous investments, enabling it to exit “with a profit”, but the pair will retain an ongoing partnership “with substantial exposure to the firm and future potential upside”.

To date, Pogust Goodhead said, it has raised $750m (£615m) of financial backing, with work in progress valued at over £11bn.

Gramercy will now become Pogust Goodhead’s primary funder on all of its matters, as well as supporting growth in the firm’s infrastructure.

Ms Alinia said that the firm did not consider equity investment. Barrister co-founder Tom Goodhead “is very clear on what he wants”, she said. “Some of the bold decisions he’s made has got the business to where it is today.

“He has a way he wants to take the business forward. While working with Gramercy is fantastic – they have such an international reach and experience of working with multinationals – ultimately this is a law firm and he wants to do right by consumers; equity was never part of his overall plan.”

Pogust Goodhead only launched five years ago – initially under the name SPG Law and then PGMBM – and already employs more than 700 people. It is the brainchild of Mr Goodhead, its managing partner and chief executive, and US lawyer Harris Pogust, the firm’s chair.

Headquartered in London, where around 270 people work, it also has offices in Amsterdam and Edinburgh, four in the US and three in Brazil. Ms Alinia said the firm would be opening in a new jurisdiction very shortly and would continue to expand internationally.

“Tom is very ambitious about having a presence all around the world and I expect the firm will continue growing aggressively in the next few years.”

The firm made its name first with the diesel emissions litigation – it has around 1.8m clients suing 14 different car manufacturers and was the first law firm to advertise on TV for a specific claim.

It was on the claimant steering group for last year’s £193m settlement against Volkswagen and is in court against Mercedes and Volvo later this year – but suffered an embarrassment with its client-care paperwork recently.

Pogust Goodhead is also running the UK’s biggest ever class action on behalf of 720,000 victims of the Mariana dam disaster, Brazil’s worst ever environmental disaster. The trial of the £36bn claim is due to start in a year’s time.

Its range of claims is expanding – last week, it announced an opt-out action for people who bought musical instruments from five leading brands which the Competition and Markets Authority found engaged in price fixing.

Ms Alinia said the firm had received “a huge number of referrals of class action cases” in the last few months. “We’ve had to sift through them and [the investment] allows us to focus on the two massive actions and also push forward these other cases, which allows the business to have a pipeline.”

Mr Goodhead said the deal would “transform our business and give us the financial power to take on some of the largest companies in the world on behalf of millions of people”.

He continued: “This landmark deal shows that global investors have good faith in the outcome of our cases. This investment will not only ensure we bring our existing cases home, but we are putting global corporate giants on notice that we have the financial muscle to take them on for their wrongdoing.

“We are taking on some of the largest companies in the world – BHP, Mercedes, Johnson and Johnson, Bayer. These companies have access to infinite resources to litigate against these cases. This deal levels the playing field and gives us the ability to go toe-to-toe with them.

“This is a capitalist solution to a capitalist problem. We are not trying to destroy these companies. We are taking them on for corporate misconduct, anti-competitive behaviour, corporate harm and misuse of the environment.”

Robert Koenigsberger, founder and chief investment officer of Gramercy Funds Management, added: “The firm has an exceptional track record and we have been impressed by the team and their approach to complex litigation.

“Allocating to this transaction is clearly consistent with Gramercy’s mission to positively impact the well-being of our clients, portfolio investments (and their communities) and team members. The investment materially aligns with our ESG and impact investing objectives.”

Gramercy based in the US but also registered with the Financial Conduct Authority in the UK.

It is a signatory to the Principles for Responsible Investment, a supporter of the Task Force on Climate-related Financial Disclosures, a signatory of the Net Zero Asset Managers initiative and a member of the Emerging Markets Investors Alliance.

Ms Alinia said this ESG focus “aligns very much with what we want to do”.

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