NEW YORK Even for a business of larger-than-life personalities and oversized egos, the marketing communications industry has recently generated an unprecedented level of buzz about itself.
While it's the volume of media exposure that would more normally be sought for clients, the tone is all wrong. However tantalizing the details, none of them offer a very positive view of the industry's inner workings: In London, Martin Sorrell has been reduced to waging a lurid libel battle. His lawyers accused former associates of referring to the WPP CEO as a "mad dwarf" and Daniela Weber, his COO of Italy, with whom he had a personal relationship, a "nympho schizo."
Sorrell, whose pinstriped image usually graces the world's business press, is finding himself the stuff of tabloid headlines.
Meanwhile, across the pond last week, Wal-Mart court filings revealed the tawdry details behind its now-litigious split with head of marketing communications Julie Roehm, who is becoming famous for salacious e-mails and accusations of favoritism while running one of the industry's most closely watched account reviews in recent years.
DraftFCB, of course, was the short-lived winner of the business. Wal-Mart claims that the review helped facilitate an alleged extramarital affair Roehm was having with her second-in-command, Sean Womack.
Scandals Share Common Threads
While both very different situations, the two stories share common elements beyond their tabloid appeal. For one thing, the unflattering revelations were instigated by the aggressive legal actions undertaken by their protagonists, Sorrell and Roehm. The cases involve allegations of affairs with subordinates and two fired top executives in bitter disputes—defendant and former WPP Italy country manager Marco Benatti and Roehm—with their former employers. And ultimately, the outcome of each case may lie in its trail of digital evidence.
Titillating details aside, one of the more fascinating aspects of each case is why Sorrell and Roehm chose to risk such airing of their own dirty laundry. Sorrell, until his recent divorce case, has carefully protected details of his private life from spilling out in public. The trial is publicizing digital slurs, about him, to a global audience for which the libelous claims were never intended. Until the trial began nearly two weeks ago, few people even remembered the details of Sorrell's firing of Benatti in January 2006, causing the Italian to sue for wrongful dismissal and the WPP CEO's countersuit, alleging breach of consultancy agreement and fiduciary duty.
After her dismissal in December, Roehm sued her employer of about 12 months for as much as $1.5 million, saying she was wrongfully fired. There appeared to be little reason for Wal-Mart, given its own image problems in recent years, to draw attention to an agency selection process that violated its own corporate ethics.
"This business has always been about making clients' business the star," said one observer. "Now you have very highly placed people choosing to go public, choosing to put themselves in negative headlines. What are they thinking?"
Roehm didn't respond to interview requests, and Sorrell declined comment, so it's difficult to answer that question. But there's no shortage of theories.
"Martin has strong views about loyalty from anyone who works for him or sells [a company] to him. Betrayal is a word he uses all the time," said one source familiar with the WPP CEO. "He's never content with winning; someone has to lose. In this case, he has to punish."
But a source close to Sorrell underscored his concern about the nature of the Web and the ability for anyone to send anonymous, libelous assertions in an attempt to ruin his reputation.
"If you think something is right or wrong, you have to make a decision about it, no matter how painful it is [to go public with it]," the source said. "The classic PR response is to sweep it under the rug." But is it now open season to write anonymous, cowardly, vicious untruthful things? It's one thing if you sign your name to it. What does someone have to write before you take action about it?"
A Byzantine Italian Twist
In the trial under way, Sorrell claimed Benatti had made death threats against him and posted a vicious e-mail image of himself and Weber.
In a Byzantine Italian twist, Benatti is also the founder and head of a Milan-based media company, FullSix, of which WPP owns more than 20 percent. (Curiously, last week, FullSix announced the appointment of Marco Girelli to its board, until the company's next shareholders meeting. Girelli was FullSix's chairman until last April, while also holding senior posts within WPP's Mediaedge:cia Italy and MediaClub SPA. He was fired from those jobs in March 2006, shortly after media reports referred to a widening of WPP's investigation at its Italian operations over unsubstantiated payments from WPP companies to FullSix that extended to bribery of clients. WPP never stated the reason for terminating Girelli and another senior colleague, Paolo Salvaderi. Girelli could not be reached for comment.)
The show in the London High Court is expected to prove pricey for the loser of the case. In U.K. libel law, with its lower burden of proof, payout amounts of damages are generally lower than the U.S., although defendants pay for plaintiffs' legal fees, which in this case could cost over $1 million for each side.
"If [Sorrell] was looking for damages, he'd file in the U.S. He's doing this to win. This is sport," said Rick Kurnit, a partner with Frankfurt Kurnit Klein & Selz, who is not involved in the case. "Litigation is the sport of kings. You have to have a lot of money to pursue, to inflict a lot of pain, to exact a pound of flesh. ... Obviously Sir Martin Sorrell has the time to indulge in this pursuit of sport. I've been a libel lawyer for 30 years and nothing republishes the libel with such impunity as a lawsuit."
Regardless of the outcome, Sorrell can't be happy with some public testimony like that from a former WPP Italy manager last week. According to published reports, she claimed Weber used her relationship with Sorrell to strengthen her position within the company.
Clients Aren't Overly Concerned
Still, it appears that clients aren't overly concerned. "I haven't heard anyone here talking about that," said a source at a top WPP client. "It's not even a water-cooler 'have you heard the latest?' kind of thing." The source added: "As long as the agency still does good work for us, we could care less about executives at the holding company."
A source at another top WPP client saw the lawsuit as something personal, unrelated to business, and therefore not a concern. "It's [Martin's] personal call," said the source. "For us, it's not an issue."
In the Wal-Mart litigation, few of the players look good in the counterclaim filed to Roehm's earlier suit.
Citing steamy e-mails that appear to contradict Roehm's denials of an affair with Womack, last summer's account review appears as a farcical exercise in which DraftFCB gained advantage with, for example, proprietary Wal-Mart sales data forwarded by the client marketing execs.
While many in the industry believe DraftFCB chief Howard Draft's credibility has been hurt by the saga, the retailer's legal filing suggests he may be the only one who exercised sound judgment when he nixed the request from Womack, then Wal-Mart's vp, communications architecture, to hire himself and Roehm. (Draft and corporate parent Interpublic are said to be cooperating in Wal-Mart's investigation.)
In Wal-Mart's counterclaim, the company said Roehm and Womack accepted gifts of expensive entertainment, watches and a case of vodka, in violation of Wal-Mart's internal policy regarding acceptance of gratuities from vendors. (Roehm later reimbursed some of those costs.)
Tony Weisman, the former DraftFCB exec who spearheaded its pursuit of Wal-Mart's account, seemed to set the tone of his professional relationship with Roehm and Womack in an e-mail, sent after a meal with the Wal-Mart execs. According to Wal-Mart, he wrote to Roehm: "Thanks Kiddo for joining us for dinner. Always fun. And nice to know we CAN have a meal [sic] together without getting s-faced."
Roehm replied to Weisman: "Thanks for hosting us. Keep it between us though. Want you guys to win fair and square!"
Weisman, now head of Digitas' Chicago operations, declined comment. Womack couldn't be reached. Digitas CEO David Kenney didn't return a call; a rep at Digitas' parent, Publicis, declined comment. Wal-Mart rep Mona Williams said, "We are a company who acted with high integrity. [Roehm's] actions were not in keeping with that integrity."
But, in its court filing, the company cites Roehm's attempts "to spin a public tale since her departure that she was discharged for being a 'change agent' and an 'envelope pusher.' In reality, she and Womack were terminated for violating their fiduciary duties as Wal-Mart officers and clearly established corporate standards of conduct."
Scandal as a Career Move
Roehm's press offensive earlier this year, in publications like BusinessWeek and New York, does uncomfortably promote scandal as a career move. Reflecting on the notoriety brought about by their dismissal, Womack said to New York: "Somehow this has made us interesting. We've met people we have never been able to meet."
In the article, Roehm boasted of writing a book. Already a producer has contacted industry figures to act as a consultant on a TV project.
Unlike the seeming client indifference to Sorrell's current court battle, the backlash to the Wal-Mart review fiasco and additional costs of restaging an agency review has already begun.
Industry consultant Joanne Davis said: "I met with a prospective client recently and the first thing they said to me was, 'Will you ensure a situation does not occur like the one at Wal-Mart with Julie Roehm?'"
Catherine Bension, CEO at Select Resources International, which conducted the Wal-Mart agency review, under Roehm's guidance, didn't return calls for comment.
Jeffrey McClelland, CEO at Cliff Freeman and Partners, said he recently congratulated a new, unidentified CMO on receiving the appointment by sending along a standard credentials package that contained an agency hat, T-shirt and a bottle of Cliff juice (Trader Joe's wine) that was promptly FedEx'ed back at an expense greater than the package he originally sent. The message in the post-Wal-Mart, Roehm era was made clear to McClelland. "Bigger clients who typically have protocols in place have to be more sensitized to a relationship that has a monetary value attached to it," he said.
One industry observer, however, doesn't think the highly publicized Roehm experience at Wal-Mart will matter in the long run.
"I don't think this will have any impact on business. It's good gossip, but the people who seem to be gossiping most are ad people," the source said. "Unlike [former Ogilvy exec] Shona [Seifert, who was jailed after overbilling the White House Office of National Drug Control Policy], when it comes to money and fiduciary responsibility, they care. They don't care about stuff like this. They already assume we're cheating liars and thieves. They lump us down there with politicians."
—with Aaron Baar and Andrew McMains
BONUS SIDEBAR: LIBEL AND PRIVACY IN THE AGE OF NEW MEDIA
Martin Sorrell's case against two former business associates is generating headlines not only for its colorful details, but its legal novelty. Sorrell is suing for libel and invasion of privacy, and in an era when digital communications allows anyone to become a publisher, the case is believed to be one of the first high-profile actions based on blog postings and an e-mailed jpeg.
U.K. libel law, which generally requires a lower burden of plaintiff proof, is different from that in the U.S., which allows consideration for First Amendment freedom of speech. What is the same in both countries, however, is that the means of delivering the claim doesn't change basic tenets of libel.
Fundamentally, the medium of expression is irrelevant to libel, explained Rick Kurnit, a partner with Frankfurt Kurnit Klein & Selz, New York. Seth Berlin, a partner at Levine, Sullivan, Koch & Schulz, Washington, D.C., concurred: As a general rule, the definition of libel is no different in this [online] medium, with one significant exception: "If I operate a discussion board, [a plaintiff] can sue you for defamatory comments, but not me. I have statutory immunity." Although Kurnit is not involved in Sorrell's case, he has been following press accounts. He said the WPP CEO needs to prove that the defendants, executives at Italian media company FullSix, uttered a defamatory statement, that the statement was presented as fact, not opinion, that it was false and it damaged Sorrell's reputation.
Because of the complexity of the evidence, a jury is not hearing the case in London High Court. Justice David Eady—widely regarded as the country's premier defamation and intellectual property authority—is overseeing the proceedings.
In London, Desmond Browne, QC, Sorrell's barrister, and Andrew Caldecott, QC, representing defendants Marco Benatti and Marco Tinelli, don't comment on trials before the judge, according to staffers at their law firms.
Sorrell's solicitors, Carter-Ruck, and those for the Italian executives, at Herbert Smith, didn't return calls.
Browne has said in court that his client has overwhelming forensic evidence implicating Benatti and Tinelli. Daniela Weber, a protege of Benatti, who is the COO of WPP Italy, is joining Sorrell in the invasion-of-privacy lawsuit.
The irony of the case, occurring just as Wal-Mart is using e-mails in a countersuit against ex-marketing chief Julie Roehm, is not lost on some observers: "While advertising is being killed by the Internet, the people who make advertising are being killed by the Internet," quipped a source.