Leagas Shafron Davis has axed 12 jobs, as part of a restructure designed to give the agency a financial lifeline.
It follows the loss of the 10m Royal Sun Alliance account last year, an expensive office move and mounting six-figure debts.
A team of accountants from Coopers & Lybrand has been brought in to advise the company, which created the Inland Revenue self assessment campaign last year, while a new finance package is arranged with its banker Coutts. The agency denies that it has been placed in administration by its creditors.
The redundancies account for more than one third of the agency’s 32 staff, including head of account management Susanna Hailstone, who was account director on the award-winning TBWA Wonderbra ads, and deputy creative director Rob Janowski. The other job losses are in production and service posts.
The cash crisis came to a head last Thursday morning when February pay cheques failed to materialise in staff bank accounts. Chairman and cheif executive Ron Leagas and managing director Mike Davis called a staff meeting at the agency and outlined the crisis.
The agency, whose main clients include the Revenue account, Sanyo and Zanussi, merged with the Ayer Network in 1993 and then pulled out last year – incurring large restructuring costs. It suffered a heavy blow last summer when financial services company Royal & Sun Alliance centralised its 15m ad account, taking the business out of Leagas Shafron Davis and into McCann-Erickson. The agency decided to keep on most of the staff but failed to win enough new business to make good the shortfall.
The move to the company’s new London offices in November also ate up funds. The final straw came last month when Leagas Shafron realised that the money set aside for the building in Margaret Street was not enough to cover costs.
Leagas and Davis will take a more day-to-day role in the running of the company. Leagas says: “We will continue to restructure the company over the next few months.”