Can brief-taking staff be called to account?

When agency executives leave, accounts often mysteriously follow them to their new employer. Branwell Johnson looks at the legal avenues for companies whose staff leave with more than a P45

Like souls condemned to Limbo, the “Saatchi 17” General Mills account team are wandering forlornly without a home after quitting their Publicis-owned ad agency in the US.

The reason for their plight is not wholly clear, but strong speculation suggests that the team members hoped to join an Interpublic Group-owned agency or form a start-up part-funded by IPG Рand that the General Mills account would follow them. At the time of the walk-out, there was talk of Publicis chairman and chief executive Maurice L̩vy taking legal action against the team and even IPG, for allegedly trying to entice away General Mills.

Although there were rumours that General Mills somehow gave the green light to the exodus, the company has since said it is “continuing our 80-year relationship with Saatchi”. Many of those who quit Saatchi, following worldwide account director on General Mills Mike Burns out of the door, are now believed to have asked for their jobs back. But the agency has already set about restaffing the account and has recruited a new creative director. Burns’ departure followed a management restructure that saw Mary Baglivo appointed chief executive of Saatchi & Saatchi New York.

Legal action, or the threat of it, is increasingly being used around the globe by agencies trying to hold on to clients. In France, Aegis is pondering whether to continue legal action against the former executives – and KR Media founders – Bruno Kemoun and Eryck Rebbouh, for actively poaching clients such as LVMH. Already, there have been raids on the offices of KR Media, in which the WPP Group has a 20 per cent stake, in search of documentary evidence.

A French court recently ruled in favour of an aggrieved agency, when Omnicom-owned TBWA sued Publicis, claiming the latter’s Paris unit had hired staff unfairly. It is not uncommon for an account to follow agency staff, whether to another established agency or to a start-up.

At the end of last year, HOW, set up by Chris O’Shea and Ken Hoggins, picked up some Waitrose business previously handled by their former agency FCB. Clemmow Hornby Inge’s founding client, Carphone Warehouse, was previously with TBWA/London – the former employer of two of CHI’s founders.

But it is rare for an abandoned agency to take legal action, partly because the parties concerned are usually careful to follow the terms of any non-compete and non- solicitation clauses and also because courts are reluctant to prevent individuals earning a living in their chosen field. Although employment legislation varies from country to country – and in the US from state to state – the general principles are constant.

Toni Lorenzo, partner in the employment and incentives department at Lewis Silkin, says that the public policy starting point for employment law is that “restraints to stop someone trading when they have left a company are void”. He adds that courts will only enforce clauses if they “go no further than is reasonably necessary to protect legitimate business interests”.

Karen Seward, partner in employment law at Allen & Overy, says that rather than the blunt instrument of a non-compete or non-solicitation clause, agencies should look at things “from a more tactical perspective”, making better use of notice periods and gardening leave. She adds that contracts should pay attention to issues such as team-poaching, and name specific client relationships an agency might want to protect.

Prospective new employers that hold out a carrot to potential staff based on their bringing business from their previous agency are also open to legal action for enticement to break contractual obligations. Seward says: “You often get stroppy letters from a previous employer to a new employer on this issue.”

WCRS kept former executive strategy director Charles Vallance away from his new client, O2, at Vallance Carruthers Coleman Priest for six months. Vallance worked on Vodafone at WCRS and the client did not want him working for a competitor so quickly.

But an agency insider says that no matter how rigorous an employer tries to be about preventing business following staff, “what the client wants usually prevails”.

Common sense and open discussion can prevent bad blood, as Leith Advertising and Newhaven have found. Owing to client clashes, Leith was forced to choose between Coors Brewers or Tennent’s. It chose the former and the Tennent’s brand team decided to strike out on their own, setting up Newhaven to handle Tennent’s. Newhaven partner Ken Dixon says: “Everybody realised that if it got nasty it would come out badly for everybody.”

The team stayed at Leith until the client’s contract expired, and even received performance bonuses. Newhaven did not pursue any other Leith client and Dixon adds: “There would have been no benefit in trying to cannibalise Leith to build our own empire because we wanted to do something quite different.”

Where the former Saatchi team will end up remains in doubt, but they are doubtless seething at becoming pawns in the power-games of advertising’s bigwigs.v

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