Charles Saatchi faces showdown

Charles Saatchi has been summoned to a showdown meeting, with Saatchi & Saatchi chief executive Charles Scott and finance director Wendy Smyth, to discuss the remainder of his three-year, £1.25m contract.

The meeting follows last week’s High Court revelations that Charles Saatchi – still president of Saatchi & Saatchi Advertising – is to be the fifth partner in the New Saatchi Agency, created by his brother Maurice and former agency executives David Kershaw, Jeremy Sinclair and Bill Muirhead. All five will have an equal stake in the venture.

The Saatchi group was seeking an injunction against the four to stop them soliciting clients and staff. It has also issued a further writ against the four, plus Charles Saatchi, to prevent them using the Saatchi name.

“If Saatchi fired Charles it would have to pay up his contract of £1.25m,” says one plc source. “However, there is nothing to stop him resigning his position if he chooses to do so.”

All the partners signed a “head of terms” – effectively the new agency’s articles of association – with the proviso that Kershaw, Sinclair, Muirhead and Charles Saatchi would not play any active role until “they were free to do so”, a reference to meeting contractual obligations. Presiding Justice Jonathan Parker was clearly annoyed by the action and told the High Court that the case was “an attempt by the plaintiff to attain relief by the back door. The back door is now closed,” he said.

The group is under pressure to act after failing to win the injunctions. Kershaw, Muirhead and Sinclair gave undertakings not to solicit staff or clients but are free to contribute to the new agency’s development, including its finances and the negotiation of a global network.

“We were not surprised that an ad agency now run by accountants should try to abuse the law,” says Kershaw. “It has been stopped in its strategy of strangling the new agency at birth.”

The London decision will also have implications for the ongoing legal actions in the UK and US. Justice Parker asked that the full UK case – where Saatchi Group will claim that Maurice induced the other three to breach their contracts and the defectors will counter-claim for constructive dismissal – be heard speedily. The US case against Muirhead returns to court in New York next Tuesday (February 21).