The Money That Can’t Move: Three Claims on One Client Account
A court awarded £42.7 million of costs to the claimants in the Mariana dam litigation, and the money landed in their law firm’s client account. A Brazilian funder says it should have gone straight into an account securing its loan. The firm says the money is held on trust for its insurers and is not available to anyone, itself included. Both may be reading their own documents correctly, which is the problem.
I am a limited partner in three private litigation-finance funds. Every quarter I get a statement, and I know what is on it: a net asset value, a list of matters, a status for each one, and what I have contributed against what I have received. The 2026 vintage is the plainest version — $1,000,000 wired in, nothing distributed out. What has never appeared on any statement I have received, from any of the three, is the route the money takes when a case finally pays. Whose account it lands in first. Who else has a right to it when it gets there. Which of those rights was written down, and which one wins if two of them collide. Those are the questions this dispute is about, and they are the ones I cannot answer about my own money.
What Landed in the Account
Pogust Goodhead is the firm behind the BHP group claim over the 2015 Mariana dam collapse in Brazil, which killed 19 people. In November 2025 the High Court found BHP liable; the next phase, on causation and loss, starts in April 2027. Along the way the court awarded the claimants their stage 1 costs, and £42.7 million of that award was paid into the firm’s client account.
In August 2026 one of the firm’s funders sued it over what happened next. Vinci SPS Capital Gestão de Recursos Ltda, a Brazilian manager acquired by Vinci Partners Investments in 2022, issued proceedings in the High Court through Fieldfisher. It advanced 90.09 million Brazilian reais, roughly £12.8 million, to fund the BHP action. It is claiming more than £84 million, plus nearly £600,000 of costs from pre-action correspondence and an earlier injunction application. DAC Beachcroft is defending.
Two allegations carry the claim. The first is that Pogust Goodhead agreed to disburse litigation proceeds to barristers and to after-the-event insurers without obtaining the lender consent its agreement required. The second is that the £42.7 million was supposed to be transferred into a designated receivables account and never was — an account the funder says the firm took more than four and a half years to open.
The firm’s answer is a sequence. It cannot move the money out of the client account until it invoices the claimants. It cannot issue that invoice until it discharges a trust operating in favor of its ATE insurers. A spokesperson put it in terms that go further than a scheduling problem: the funds are held on trust for the insurers “as a condition of securing the ATE insurance,” that insurance exists to protect the firm’s clients against adverse costs they could otherwise be personally liable for, and the money is therefore “not available for distribution to either the Brazilian lender or any other party, including Pogust Goodhead.”
Vinci SPS rejects the sequence outright. Its position is that its rights take priority over any trust in favor of the ATE insurers.
Three Claims, and Nothing That Ranks Them
Set the arguments side by side and the structure of the problem shows up.
| Who | What their claim rests on |
|---|---|
| Vinci SPS | A funding agreement requiring proceeds to be routed into a designated receivables account, and lender consent before any disbursement |
| The ATE insurers | A trust over the client account, imposed as a condition of writing the adverse-costs cover in the first place |
| The claimants | It is their costs award, and the insurance the trust secures is what stands between them and personal liability for BHP’s costs |
| Pogust Goodhead | Holds the account, says it cannot invoice until the trust is discharged, and says the money is not available to it either |
Each of those is a real entitlement created by a real document. What is missing is a document that ranks them. Vinci SPS asserts priority; the firm’s ATE insurers presumably believe their trust is a trust and not a queue position. The barristers, notably, have already been paid, which is what makes the consent allegation more than a technicality — somebody with a call on the money was satisfied while the argument about who ranks where was still running.
This is what “secured against proceeds” turns out to mean in practice. A lender to a claim does not hold the claim. It holds a promise about where money will go after it reaches somebody else’s account, and that somebody is a law firm with fiduciary duties to clients, professional obligations about client money, and a separate contract with an insurer whose cover is the reason the case could be run at all. The security names where the money is supposed to end up, and everything between here and there belongs to somebody else.
The Account That Took Four and a Half Years
The allegation I keep returning to is the smallest one. A designated receivables account is not a clever structure; it is a bank account whose whole function is to be somewhere other than the borrower’s general pot, so that when money arrives it is already segregated and the lender’s interest attaches to something identifiable. Opening one is administrative. According to the claim, it took more than four and a half years.
For most of that period nothing turned on it, because there were no proceeds. That is exactly why it did not get done, and it is exactly why it matters. The mechanism that makes collateral real is the one that is completely inert until the day it is needed, and on that day it is either in place or it isn’t. If the account had existed when the £42.7 million was paid, there would still be an argument about the ATE trust, but it would be an argument between two identified claims over an identified pot. Instead the money went into the general client account, and the question became what the firm is permitted to do with a mixed fund it holds for clients. A covenant nobody has needed yet looks the same from the outside whether it has been performed or not, and the day you find out is the day it has to work.
What a Costs Award Isn’t
One precision worth holding on to: the £42.7 million is not damages. Nobody has been compensated for the dam. It is an interim award of the claimants’ costs for stage 1 of the litigation — a reimbursement of what it took to get a liability finding, paid while the case that determines the actual recovery is still nearly two years from trial.
That changes what the fight is about. This is not competing claims on a recovery; it is competing claims on the working capital of a case that has not yet produced one. The ATE cover has to stay in force through April 2027 and beyond, which is precisely why the insurers want the trust intact. The funder wants its advance back now, from the first real money the case has generated. The firm has to keep paying for a trial. Every one of those is a defensible use of the same £42.7 million, and the case cannot afford all three.
What an LP Never Sees
Here is why I read a London client-account dispute at all when I have no exposure to any party in it.
My funds do the thing Vinci SPS did. They advance money against claims, and their security is a contractual interest in what those claims eventually produce. When a matter resolves, the proceeds will arrive somewhere — a law firm’s client account, an escrow, a claims administrator — and at that point my fund’s position depends on whether it is first in line at that particular account, and on whether anyone wrote down who is.
Nothing in my quarterly reporting addresses this. I receive a mark and a status. I do not receive the payment waterfall for a resolved matter, or whether any co-funder, insurer or lender to the same claim sits ahead of my fund, or whether the segregated accounts the documents contemplate have actually been opened. If a manager of mine had a receivables account outstanding for four and a half years, there is no line item where that would appear, and I would learn about it the way Vinci SPS’s investors are learning about it — from a claim form.
So the question I would put to a GP has changed shape. It used to be some version of what is the collateral. The better one is narrower and more answerable: when this case pays, whose account does the money land in, who else has a right to that account, and is our priority written in a document that binds them — or only in ours?
The Honest Handicap
Several things cut against the way I have framed this.
These are allegations, and the firm has not yet answered them in court. Everything above about consent, the receivables account and the four and a half years comes from a claim form and from reporting on it. Pogust Goodhead has instructed counsel and has said publicly that the funds are not distributable. Nothing has been decided, and I am not asserting that the firm breached anything.
The firm’s position is not a dodge. It would be easy to read the invoice-then-trust sequence as a stall, and I do not think that survives contact with what ATE insurance is for. Adverse-costs cover in a claim of this size is the thing standing between individual Brazilian claimants and personal liability for a mining company’s legal bill. An insurer conditioning that cover on a trust over recoveries is behaving rationally, and a solicitor who honored a lender demand over a trust protecting his own clients would have a much worse problem than this lawsuit. The strongest version of the firm’s case is that the money genuinely is not free, and it is not free for reasons that exist to protect the people the case is for.
The £84 million is a pleaded number and I do not know how it is built. Against an advance of about £12.8 million it looks like a striking multiple, and I have seen it reported alongside a description of the claim as a demand that the firm repay debts. That suggests it may capture more than the single advance — accrued return, other tranches, contractual consequences of the alleged breaches. I cannot decompose it from public reporting, and treating it as a 6.6x return on £12.8 million would be inventing a fact.
Bad routing is not the same as bad underwriting. On the merits the case has gone about as well as a funder could ask: BHP was found liable, and the costs award exists because the claimants won stage 1. Whatever happens to this £42.7 million, the underwriting call was right. That is worth saying because it is the opposite of the usual funding post-mortem, and because it isolates the failure to the plumbing.
And this is one dispute at one firm with a documented history. Pogust Goodhead was sued for £2.2 million by Seladore Legal in 2025, its co-founder left after a leave of absence the same year, and it has taken a $552.5 million facility from Gramercy in 2023 with a further $150 million in June 2026. A firm carrying that much leverage against one enormous case is not a representative sample. I am using it as a specimen of a mechanism, not as evidence about the market.
Where I Land
I am not changing an allocation over this, and there is nothing to change: my funds are illiquid, the capital is called, and the only live decision I ever have is whether to commit more.
What I have changed is what I consider a complete answer about security. For years the thing I checked was whether a position was secured and against what. This dispute is a case where the answer to both questions was fine — there was a funding agreement, it named proceeds, it required a segregated account — and the money still stopped dead, because the agreement bound the firm and not the insurer, and the account it pointed at did not exist when it was needed.
£42.7 million arrived. It is sitting in a bank account in London. Three parties can each explain, from their own paperwork, why it is spoken for, and the only thing they agree on is that it isn’t going anywhere.
Sources
- City AM: “Law firm at centre of BHP mammoth lawsuit sued by its own funder” (Aug 2026), reporting the High Court claim form — Vinci SPS Capital Gestão de Recursos Ltda advanced 90.09m Brazilian reais (about £12.8m); claim for over £84m plus nearly £600,000 of costs from pre-action correspondence and a prior injunction application; the £42.7m interim costs payment received into Pogust Goodhead’s client account; the allegation that proceeds were disbursed to barristers and ATE insurers without lender consent and that the firm failed to transfer the sum into a designated receivables account, having delayed opening it for over four and a half years; the firm’s position that it cannot transfer before invoicing claimants and cannot invoice before discharging a trust in favor of its ATE insurers; Fieldfisher for the funder, DAC Beachcroft defending; the Gramercy $552.5m facility of October 2023 and the further $150m of June 2026
- Law.com International: “Pogust Goodhead Sued by Litigation Funder in Mariana Dam Trial” (Aug 13, 2026) — Vinci SPS acquired by Vinci Partners Investments in 2022; the firm’s statement that the claim concerns “funds awarded by the court in respect of the stage 1 costs of the Mariana litigation,” that those funds are “held in a client account on trust for the benefit of the firm’s after-the-event (ATE) insurers as a condition of securing the ATE insurance,” that the cover protects claimants against adverse costs for which they “may otherwise be held personally liable,” and that the funds are “not therefore available for distribution to either the Brazilian lender or any other party, including Pogust Goodhead”; the Seladore Legal claim and the co-founder’s departure; Quinn Emanuel joining for the next stage in June 2026
- Legal Funding Journal — “Brazilian Funder Sues Pogust Goodhead for £84m Over Handling of Litigation Proceeds” (Aug 20, 2026), including the November 2025 High Court finding of BHP’s liability over the 2015 dam disaster and the causation and loss phase listed for April 2027. Law360, “Pogust Backer Demands £84M Over Brazil Dam Case Funding” (Aug 17, 2026), reports the claim as a demand that the firm repay debts funding the BHP litigation
- Author’s own records, reconciled against the Portfolio page — three private litigation-finance fund positions, including the 2026 vintage at $1,000,000 contributed and nothing distributed
Commentary and personal experience — not investment, legal, or tax advice. Investing carries risk, including total loss of capital. Always do your own due diligence.
