Overlooking the sparkling waters of Copacabana beach and costing about £500 a night, Rio de Janeiro’s five-star Emiliano hotel could not be further removed from the devastation of Bento Rodrigues.
The uninhabitable village, about 250 miles from Brazil’s party strip, is still covered in toxic sludge a decade after it became ground zero of the country’s worst ever mining disaster.
So with its infinity pool and rainforest-themed spa, the Emiliano must have been a welcome respite for Thomas Goodhead, a barrister, during regular trips to Brazil for a £36 billion lawsuit over the Mariana dam collapse.
Goodhead’s spending and lifestyle are now at the heart of a bitter dispute with his former law firm, Pogust Goodhead, that threatens to derail the biggest class action in legal history.
The Emiliano hotel. Goodhead stayed so regularly that he left laundry that was cleaned and hung in the wardrobe of his room when he returned
Goodhead, a 43-year-old rising star on London’s law scene, has been ousted from the firm he co-founded amid allegations that investment funds intended for litigation were spent on private jets and helicopters and parties on private yachts.
The Times can reveal that an internal investigation into alleged misconduct at Pogust Goodhead, one of the City’s most high-profile firms, has also uncovered complaints of a toxic culture.
The scandal will rock the legal fraternity given that Pogust Goodhead is leading two of the most prominent class actions ever taken: the Mariana dam collapse case, involving more than 620,000 claimants in Brazil, and the “Dieselgate” emissions claim against five car manufacturers and affecting 1.5 million British motorists.
The row has turned increasingly acrimonious. Goodhead claims he is the victim of a smear campaign after a falling-out with funders over the direction of litigation. He denies lavish or improper overspending and insists the firm was properly managed.
‘It’s not a jolly out to Brazil. You’re supposed to be client-first’
When Goodhead secured a record $552 million (£450 million) investment from the US asset management fund Gramercy in 2023, he said it would allow his firm to take on “corporate giants” across the world.
However a report commissioned by a new board at Pogust Goodhead details serious allegations that monies intended for litigation were spent on “unnecessarily lavish travel and entertainment”, personal items and unrelated business development activities. According to investigators from DLA Piper, one of the world’s biggest international law firms, there was “excessive and uncontrolled spending directed and led by Goodhead”.
The interim report, seen by The Times, sets out the use of private jets and helicopters on more than a dozen occasions in Brazil between September 2023 and February this year at a total cost of just over 576,000 Brazilian real, or nearly £82,000. While some of the trips were to remote areas, some were cities serviced by commercial airlines. Invoices showed Goodhead using a private plane from Vitoria, on the southeastern coast of Brazil, to Rio, in October 2023, costing just over £5,600, and Goodhead and partners using a private plane to fly from Sao Paulo to Rio in December 2023, costing £5,900, the report says.
According to the report, Goodhead, managing partner as well as chief executive of Pogust Goodhead, held two private yacht parties in Rio for staff, in August and December 2023, costing £5,300. One included a “premium package for churrasco [a steak bar] and an open bar, with the party continuing at a local yacht club. Another party was held the following September costing £3,900.
Many at Pogust Goodhead became uncomfortable with the excess: “It was the optics issue,” one former employee said. “Tom wanted to present us as a magic circle-esque firm, where the lawyers are having a great time. On the superyacht, flying in helicopters over the damaged towns and cities or communities. But you’re supposed to be client-first. It’s not a jolly out to Brazil. They genuinely thought they deserved it. They thought that they worked really hard. And this was what you did when you were a senior lawyer.”
A post on LinkedIn in which Goodhead speaks about expanding the firm’s services in Brazil
Staff in Rio also attended a samba school in May last year. More than £5 million was spent on travel alone in 2023 and last year, according to the report, and over £100,000 on travel, marketing and expenses for a film crew compiling a documentary for the firm on its Brazilian class action.
An invoice showed just under £40,000 for a deposit on a stay at a luxury wine lodge in Uruguay for a small group of senior lawyers and staff in November 2023. Goodhead’s lawyers said the lodge was intended to be a corporate training venue, that the deposit pre-dated Gramercy funding and that the visit ultimately did not take place. A source close to the firm said: “There just wasn’t the financial prudence for a business that ran entirely on debt until it won its cases.”
Goodhead stayed so regularly at the Emiliano that he left laundry that was cleaned and hung in the wardrobe of his room when he returned. On other trips abroad, staff making the booking were asked to ensure Goodhead had “the biggest suite”. A source said: “He started to spend money like it was infinite. He would miss first-class flights, three or four times. And then just rebook them.”
Goodhead rejects claims of expenses largesse, saying he went to Brazil more than 70 times and was co-ordinating 400 staff on the ground and 3,000 local lawyers. He said: “It was often necessary to use helicopters and private aviation to reach inaccessible areas. I regularly stayed in business hotels in Rio, which was the centre of our operation. Any corporate hospitality was in line with other City law firms of our size.” He denies any suggestion that money intended for litigation was improperly spent.
Claims of a boardroom coup
In 2022 a luxury gala at the Wallace Collection, a museum in Marylebone, was billed as the firm’s annual corporate celebration doubling as Goodhead’s 40th birthday party. Pictures posted online show lawyers and the firm’s guests in black tie sipping on champagne, and Goodhead being presented with a layered cake with candles. It made some insiders uneasy.
Goodhead being presented with his 40th birthday cake
One said: “Lawyers are the tool to the cause, not the cause itself.”
Goodhead had set out to shake up convention from the moment he left the University of Cambridge with a postgraduate degree in politics and education policy, having been at a comprehensive school in Newport, south Wales, before reading philosophy, politics and economics at Oxford.
At 24, he announced that he would stand for the Conservatives for a seat on the Welsh assembly — despite claiming to be the descendant of Labour royalty Aneurin Bevan, the father of the NHS. His claims caused bemusement with some in Bevan’s family, who said they had never heard of him, though Goodhead insisted there was a link on his mother’s side, listing other relatives who would confirm it.
His political ambitions were short-lived — he missed the deadline for registering his candidacy because he was in the United States planning his wedding to a New York lawyer.
Goodhead became a barrister handling slip-and-trip cases in supermarkets before launching Pogust Goodhead with the specific aim of running class actions against multinational corporations. He won substantial victories including a high-profile settlement with Volkswagen over emissions claims, and over data breaches related to British Airways and Uber.
• Class actions and the row over litigation funders
In a statement to The Times, Goodhead said: “When you build a firm that successfully takes on powerful corporate defendants, you make enemies.”
In early August, some lawyers at Pogust Goodhead woke up to their inclusion on a WhatsApp group titled “hostile takeover”. Goodhead was placed “on leave” and replaced as chief executive by Alicia Alinia, the chief operating officer.
It followed job cuts and reports this year that the firm was teetering on the brink of insolvency. Its published accounts had shown net debts of more than £500 million and auditors flagged a “material uncertainty” whether it could continue.
In June it was reported that BHP and Vale, the Mariana co-owners being sued on behalf of more than 620,000 claimants, were involved in a settlement offer of roughly $1.4 billion over the dam collapse disaster in which 19 people were killed, thousands were displaced and untold ecological damage was unleashed on the mining region of Minas Gerais. Pogust Goodhead was said to be holding out for a higher sum.
Residents of Bento Rodrigues observe the damage in 2015
RICARDO MORAES/REUTERS
Goodhead, who officially left the firm on September 12, has claimed he was the victim of a “boardroom coup” after tensions with Gramercy and senior colleagues over the direction of the litigation. Goodhead, who says he always acted with integrity in the best interest of clients, claims he felt under pressure to settle the BHP claims. Other lawyers have since left and are said to have cited concerns about alleged influence by Gramercy. Gramercy said it was “simply untrue” it had ever had any influence on client matters.
Pogust Goodhead has insisted it was “entirely independent from all funders, including Gramercy, maintaining full control over the firm’s strategy, operations and decision-making”. Three new board members including Alinia, who has been part of the leadership since April 2022, have been appointed by a receiver.
Alinia has promised a culture reset and stable future, saying she tried hard in her previous role to professionalise the firm.
Goodhead’s parents flown business-class to Sydney
In November 2023 Goodhead’s parents were flown business-class to Sydney, where their son set up a satellite office that folded within 18 months. Goodhead’s lawyers acknowledged the tickets were bought using Pogust Goodhead accounts, but categorised them as a legitimate personal expense.
DLA Piper investigators alleged that Goodhead wrongly used the firm’s director’s loans for personal expenses. In total £500,000 of personal expenses and payment of settlement monies to Goodhead was put through the account over five years. Investigators alleged that personal spending included a driver’s awareness course and accommodation while his flat was renovated. It is understood that Gramercy maintains that the terms of the funding agreement were breached.
The allegations are hotly contested by Goodhead, and both parties are involved in legal disputes about the arrangements. His lawyers said that, while working 70 to 80 hours a week, his personal and professional life were almost entirely intertwined.
His director’s loan account was used for significant sums of personal expenses but Goodhead denied there was anything improper or unusual. Accounts were reconciled, Goodhead said, claiming he was owed £2.7 million by Pogust Goodhead for money he injected to cover staff payroll before his departure.
Goodhead said in a statement: “Pogust Goodhead was financed by commercial loans, not client funding. No client or ring‑fenced litigation funds were ever used for my personal expenditure. Any expenses were fully settled under my director’s loan account of which our funders were fully aware.” He said any corporate hospitality was in line with other City law firms of a similar size.
His lawyers emphasised funding could be used for legitimate business expenses, including hospitality. They said Goodhead’s use of the account was permitted but was now being used as a weapon against him after the relationship broke down.
The DLA Piper report alleged that there had been contravention of credit agreements with NorthWall Capital, previous litigation funders, as well as Gramercy. NorthWall declined to comment. It is understood there is no dispute between NorthWall and Goodhead. Goodhead said NorthWall was “exceedingly happy” with the return on its investment.
Supporters of Goodhead said he had not been given the DLA Piper report nor seen any evidence that backed up its serious allegations.
It is understood that Goodhead’s conduct has been reported to the Solicitors Regulation Authority (SRA) and the Bar Standards Board, although it is not known whether he is under investigation. The SRA is monitoring the firm. Goodhead has not been approached by the SRA and has not had the opportunity to respond.
‘Succession was nothing compared to Pogust Goodhead’
Other insiders complained that as the firm grew, HR and compliance practices were resisted.
One former employee recalled: “It was an absolute shit show from day one. I was aghast every day I was in there. If you look at Succession [the television series] and you think like that’s a toxic culture, that’s nothing compared to what was in Pogust Goodhead.”
Other prominent lawyers in the firm have been drawn in to the scandal. According to DLA Piper’s report, a six-figure payment was made to Ibar McCarthy, a barrister, by the firm Excello, which was under the umbrella of Pogust Goodhead, then known as PGMBM, after an internal investigation in 2021 into complaints by two employees.
McCarthy’s lawyers said his departure in October that year was resolved amicably and that there were no findings of wrongdoing made against him. Last year McCarthy signed a lucrative deal to conduct work for the firm on a conditional fee agreement basis, better known as “no win, no fee”.
According to messages between Goodhead and the firm’s other co-founder, Harris Pogust, seen by investigators, Goodhead had viewed McCarthy as a “very flawed man”. In messages cited by the DLA Piper investigators, Goodhead noted in October 2022 that McCarthy had shown up for staff photographs at his new firm with a black eye. McCarthy declined to comment. McCarthy dressed up as a leprechaun on one occasion, which the report detailed.
Pogust Goodhead confirmed that Chris Neill, Goodhead’s right-hand man and chief legal officer, left the firm after an investigation upheld a finding of gross misconduct. Neill said he was given no details for his suspension in August and that none of the allegations had been put to him. He said he was preparing a claim for unfair dismissal and that he was dismissed for blowing the whistle on Pogust Goodhead’s relationship with Gramercy. He denies any suggestion of misconduct.
Goodhead is accused of being aware of some of the concerns over issues with McCarthy and Neill’s conduct but not taking sufficient action.
DLA Piper acknowledged its report was preliminary and lacked some context on a number of issues because of a lack of engagement by Goodhead and Neill, despite requests for interview. Investigators said they were hampered because they could not obtain their narratives, and had to rely on evidence from Pogust Goodhead employees who had co-operated.
Goodhead disputed claims of a toxic culture. He said: “PG was full of entrepreneurial spirit, which drove our achievements. We pursued all complaints robustly and thoroughly, engaging external law firms when necessary to ensure impartiality. I have never ignored or concealed an allegation of serious misconduct.”
He said his commitment had always been to his clients.
A spokesman for Pogust Goodhead said: “The individuals concerned are no longer employed by Pogust Goodhead, following decisive action taken by the board.
“The alleged conduct is deeply concerning and does not reflect the values or standards of the firm today. Pogust Goodhead is now run by an experienced independent board and leadership team with a robust governance structure in place.”
Judgment day for the dam collapse claimants
Pogust Goodhead is certainly in need of a win. If the claimants are successful in the Mariana dam claim, which was heard over 12 weeks in a civil trial at the High Court this year, damages are expected to reach the billions and the firm’s share would also be significant. It is understood to be acting for the Brazilian claimants on a damages-based agreement — a form of “no win, no fee” deal that allows the lawyers to take up to 30 per cent of the payout if the claim is successful.
When the dam collapsed in 2015 the flow of toxic mud travelled more than 370 miles. It obliterated communities, contaminated water supply and destroyed the livelihoods of thousands of people. Goodhead accused BHP, the Australian-Anglo mining company, of making “insulting offers as low as $200” in the aftermath to people who had their lives destroyed, and his work has been credited with drawing attention to their plight.
Juliano Duarte, the mayor of Mariana, outside the High Court in London in March with Monica dos Santos, Gelvana Rodrigues and Pamela Fernandes
HENRY NICHOLLS/AFP/GETTY IMAGES
The publicity resulted in pressure on the Brazilian government to improve its compensation offer, but Pogust Goodhead also pressed on with a claim in the British courts, saying it was necessary for corporate accountability and greater financial compensation.
Class-action lawsuits are already under attack from corporates and politicians who claim they result in low payouts for victims, a disproportionate windfall for lawyers and coercive settlements. Their supporters, who say class actions are the only way to secure proper justice for large groups of people, fear that the fallout at Pogust Goodhead will further dent confidence in how the US-style litigation is being handled by Britain’s legal profession.
The Mariana judgment is expected before Christmas. It seems doubtful that Goodhead, until now the charismatic figure at the heart of the case, will be there to see it through.