Pogust Goodhead’s Arrival Down Under
The arrival in Australia of UK-based class action law firm Pogust Goodhead has businesses worried that the Australian government’s permissive approach to class actions could cost shareholders billions, as reported here recently.
A report in the Australian Financial Review reported on key groups like the Business Council of Australia, the Australian Chamber of Commerce and Industry, and Ai Group indicated that the influx of foreign law firms like Pogust Goodhead, backed by large litigation funders, could lead to aggressive legal battles against companies listed on the Australian Securities Exchange (ASX).
Pogust Goodhead focuses on environmental justice. Co-founded by UK barrister Tom Goodhead (pictured) the firm has been at the forefront of UK group consumer claims, representing millions of clients throughout the UK and the world, securing settlements in the Volkswagen NOx emissions group litigation in May 2022 and the British Airways data breach claim in 2021.
But the firm’s arrival has raised concerns among corporate leaders.
The firm’s clear objectives to target local multinational corporations and the Australian head, Amie Crichton, (pictured) the expressed the firm’s commitment to holding corporate Australia accountable for its actions.
Former Australian treasurer Josh Frydenberg attempted to limit class actions, but these efforts were reversed by Assistant Treasurer Stephen Jones following the 2022 federal election.
Innes Willox, CEO of the Australian Industry Group, was reported by the AFR criticizing this shift, noting it could lead to frivolous lawsuits, as courts are now prime targets for cash-rich law firms funded by litigation financiers aiming for hefty profits.
Lenient Class Action Environment
Willox described Australia’s previous regulations on class actions as some of the world’s most lenient, attracting foreign legal speculators driven by profit. He argued that the government’s failure to strike a balance has made the recurrence of foreign legal speculation inevitable.
Pogust Goodhead has already launched significant lawsuits in the UK, including a $70 billion class action related to Brazil’s Samarco mine disaster, involving BHP.
The potential value of compensation, as estimated by Pogust Goodhead, has leapt from £10 billion in December last year and £5 billion when the lawsuit was filed in 2019.
The firm’s financial backing includes a substantial £450 million from Connecticut-based hedge fund Gramercy to support actions against major global firms. This has sparked debate about the potential consequences for the Australian legal system, where such funding could distort the court’s purpose, turning it into a tool for profit.
Critics argue this could increase speculative legal actions that burden Australian companies with significant costs and risks, potentially deterring future investments. Some suggest that these actions primarily benefit foreign investors at the expense of genuine claimants and undermine the integrity of the Australian legal system.
Despite the controversies, Pogust Goodhead’s expansion and the financial strategies supporting it represent a significant evolution in litigation funding, moving from self-funded law firms to those backed by hedge funds and private equity.
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