The founders of Kitcatt Nohr Alexander Shaw, the independent U.K. agency that sold to Publicis in 2011 are suing Publicis Groupe for up to £8.5m, Campaign reports.
Publicis bought the shop in 2011 to merge with the London office of DigitasLBi. The acquisition was structured around an earn-out tied to the future performance of KNAS. Upon finding out that DigitasLBi’ P&G account represented a majority of its revenue, KNAS sought reassurances about the strength of the relationship, according to Campaign. Digitas’ global chief financial officer (at the time) Joseph Tomasulo informed KNAS that while it had “the confidence of a retainer.”
As we now know, that was not true.
In an opening statement, Andrew Sutcliffe, a lawyer representing KNAS, said Publicis withheld “critical information” from the agency’s shareholders in “circumstances so appalling that Publicis’ own employees have subsequently reacted with embarrassment and guilt.”
According to the lawyer, despite Digitas’ reassurances about its relationship with P&G, the “impending loss of Digitas UK’s P&G business had in fact been widely anticipated within Publicis and DigitasLBi UK since as early as July 2010.”
KNAS then learned that the agency had lost a significant portion of the P&G business “just a few weeks” after signing the agreement.
Another portion of the lawsuit concerns a “binding agreement” KNAS claims occurred with Publicis in 2012 dealing with adjustments so their earn-out was not impacted by the loss of the P&G business, but Publicis Groupe denied in 2014 that any such agreement had been reached.
In addition to Tomasulo, now executive vice president and chief financial officer at IPG’s R/GA, other individuals named in the case include former Digitas CEO and current Publicis Media president of data, technology and innovation Stephan Beringer and former Digitas finance director, current Publicis Media U.K. chief finance director Charlotte Frijns.
Kitcatt Nohr continues as an agency today, with clients including Sky, Nissan and Bupa, led by managing director Hattie Whiting. Current employees are not involved in the case.
“Publicis Groupe’s policy is to not make any comment about pending litigation, other than to say that we are vigorously defending ourselves against the claims,” a Publicis spokesperson told Campaign in a statement.
The news follows another legal claim against Publicis earlier this month, when former MSLGroup China CEO Faith Brewit filed a gender discrimination lawsuit with the Shanghai Arbitration Bureau against the holding company.
Image: Kitcatt and Nohr (from Campaign)