News Analysis: Prince Charming Or Prince of Thieves?

As IPG Begins Legal Action Against Ex-Lowe Chairman Marvin Sloves, Evidence Suggests He Was Both Consultant And Conspirator NEW YORK--As Marvin Sloves' contract with Lowe & Partners/SMS neared its end in late 1998, the agency and its parent, Interpublic Group, found itself with two troubling options. On the one hand, renewing the co-chairman's contract would virtually assure the $125 million Mercedes-Benz account's stability for as long as the term of the new deal. But it would also perpetuate Sloves' rule of the business, an increasingly unappealing solution. On the other, Lowe could bid farewell to Sloves once and for all and with him, most likely, the entire Mercedes account. Lowe and IPG, it appears, attempted to pull off a third option: keeping Sloves on as a consultant. This best-of-both-worlds scenario, they figured, would keep Sloves at arm's length--allowing chairman Lee Garfinkel and vice chairman Gary Goldsmith to finally run the agency unencumbered--while keeping Sloves on call, appeasing Mercedes. The consultancy arrangement had been planned for more than a year, after Sloves expressed an interest in retiring at the end of his contract. Sources say, however, that Sloves changed his mind, wanting to stay on, and was insulted when that invitation never materialized. Sloves denies there were problems surrounding his departure and says he was looking forward to retiring and spending more time at his villa in Italy. "Nobody asked me to stay. My contract was up," he says. The consulting agreement Sloves received was expected to help smooth the transition between Mercedes and Garfinkel after his departure from Lowe. IPG now believes that Sloves undermined the agency and his actions affected Mercedes' decision to pull the account, said sources. IPG's belief that Sloves engaged in foul play is underscored by the fact the holding company has initiated legal action against him. "We have filed judicial proceedings against Marvin arising out of certain items relating to his employment and consulting arrangement," confirms Nick Camera, IPG's in-house counsel. He declined to elaborate, but sources say the charges center on accusations of breach of contract and violations of non-compete clauses. Garfinkel and agency executives declined to comment. From the beginning, the partnership between Sloves, 65, and Garfinkel, 44, was not a melding of kindred spirits. Even though both grew up in the Bronx and had close relatives who were prizefighters, the pairing was "your classic loveless marriage of convenience," says one Lowe insider. Sloves hails from the Golden Age of advertising, when larger-than-life personalities like Bill Bernbach--whom he cites as his inspiration for getting into the business--held court. It was a more freewheeling time, before consolidation and holding companies infused the industry with a sensibility that was less about style and more about balance sheets. In comparison, Garfinkel is of the next generation and possesses a laid-back style, a stark contrast to Sloves' flamboyance. Garfinkel made his mark at such creative meccas as Levine, Huntley, Schmidt & Beaver and BBDO, where his creative star rocketed on the Pepsi business. Garfinkel had built his reputation as someone who cared most about the work and had little enthusiasm for schmoozing clients. Holding clients' hands is Sloves' prime talent. Sloves first met Mercedes-Benz North America chief executive Michael Jackson during the Mercedes agency review, run by Jackson and won by Sloves' previous shop, Scali, McCabe, Sloves, in 1992. Garfinkel and Sloves were thrown together when SMS and the Mercedes account were folded into Lowe in 1993. So ensconced with Mercedes is Sloves that Jackson gives him much of the credit for his ascendancy to the top North American spot at Mercedes. In return, Sloves has gone to extraordinary lengths to cement the relationship. He once hopped on a plane to Stuttgart at a moment's notice to attend an obscure awards banquet for a Mercedes executive. When Mercedes arrived at Lowe, all concerned were thrilled with Sloves' grip on the business. And as Lowe has grown over the years, Sloves and Garfinkel, with their differing styles and talents, have made an effective--if unlikely--pair. The relationship between Mercedes and Sloves, however, eventually began to remind the agency of the adage, "Be careful what you wish for." Soon after his arrival, Sloves began to display what former partners call his trademark--he hunkered down with his account and refused to share his marbles. Sloves' old school bag of account management tricks and his estimable charm had made him a formidable client handler, and he was not afraid to use that power inside the shop. Since the 1993 merger with SMS, Sloves' vigilance over Mercedes has created a divisive environment, sources say. He kept other senior account managers away from Mercedes, Lowe's biggest piece of business, accounting for 20 percent of the shop's total revenue. Sources say that situation is partly to blame for the revolving-door presidency at the agency. Depending on who you talk to, Sloves is either a charming, sophisticated client partner or a Machiavellian game player whose experience as an adman is matched only by his ability to keep colleagues out of the loop and away from power. The latter charge is firmly rejected by Sloves: "It's absurd and absolutely incorrect. Lee had as much access to Mercedes as he wanted." In fact, Garfinkel's involvement with Mercedes was increasing toward the end. At a recent dealer convention in Hawaii, Jackson thanked Sloves and Garfinkel for their contributions. Sources also say that Garfinkel was encouraged by Jackson's ostensible comfort with the plan to turn Sloves into a consultant. The consultancy deal, according to some theories, was therefore a sweetener to make Sloves "behave." Apparently, it was not sweet enough. Although Sloves publicly supported Lowe and Garfinkel, he was making inquiries to other agencies about handling the Mercedes account without Lowe's knowledge, sources say--a charge Sloves also vehemently denies: "I have never talked to another ad agency about moving the Mercedes account in any way, shape, or form Any decision on what will happen with the Mercedes account is Mercedes' decision, not mine." The client echoes that statement, but observers are skeptical that Sloves will not be part of the equation when the dust settles. As Sloves watched over Mercedes, both the agency and Garfinkel's ambition grew, sources say. Garfinkel was intent on completing the transition within the agency from Sloves, the old guard, to a new generation--his. There seemed to be plenty of signs that he could do it, including the apparently positive signals from Jackson. Sloves was also expected to help smooth the transition. Despite reports to the contrary, Sloves insists he would be "delighted and honored to do anything they asked me to under the consulting agreement." As Mercedes prepares to roll out the new S-Class campaign in the spring, Lowe's swan song, the loss of its flagship business and those of Diet Coke and Sony do not paint a pretty picture for the agency. Although no one questions his creative chops, naysayers have wondered how Garfinkel will fare as the sole chairman. Last year, however, the shop was a formidable force in reviews, and won brands like Heineken and Valvoline. Mercedes, meanwhile, has set its sights initially on the holding companies that handle business for its DaimlerChrysler parent, Omnicom and True North. BBDO handles creative for Dodge and Pentacom handles Chrysler's national media, while TN's Bozell is the lead shop on Plymouth, Chrysler brand and corporate image work, and Jeep. The dissolution of the Lowe-Mercedes marriage proves once again, "it's not about the work, it's about relationships, stupid." It ultimately didn't matter that the shop had won a truckload of awards or that Mercedes sales had jumped about 40 percent in 1998. What was important was the bond between Sloves and Jackson. "[Sloves] lacks integrity, and [Lowe] lacks courage, and together, it enabled this to happen," concluded one agency executive.

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News Analysis: Prince Charming Or Prince of Thieves?

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