MAURICE 1, SAATCHI 0 IN COURT WARS

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LONDON-Despite Saatchi & Saatchi Co.'s best efforts, Maurice Saatchi's new ad agency is fast becoming a reality-and may announce an international alliance as soon as next week.

Last week the fledgling New Saatchi Agency grabbed its first two clients from Saatchi, won a court victory and announced Charles Saatchi had quit his $480,000 post as president of Saatchi & Saatchi Co. However, Charles said he was "constructively dismissed" and hoped to join his brother's operation.

Significantly, the new agency is drawing closer to completing plans to link up with an international network and set up overseas offices.

Last week a U.K. judge ruled that David Kershaw, Bill Muirhead and Jeremy Sinclair, who quit top jobs at Saatchi & Saatchi last month, may take non-competitive "preparatory steps" to help the new agency as long as they do not solicit Saatchi clients or staff. The judge then ordered Saatchi & Saatchi to pay both sides' court costs, likely to top $150,000, for the three-day hearing.

A trial this spring will determine how soon the three men can join Maurice's new agency. The trial will also cover when Charles Saatchi can join the agency and whether the Saatchi name can be used.

Mr. Kershaw said he is "very confident" that within six months the court will free the three to become partners in the New Saatchi Agency without restrictions. Already, jobs have been tentatively allocated.

"I am responsible for looking at network relationships and partner relationships, including media buying," Mr. Kershaw said. "Jeremy [Sinclair] is in charge of finance and agency philosophy." Charles Saatchi, the creative visionary behind Saatchi & Saatchi, will be "inspirer in chief," Mr. Kershaw said. Mr. Muirhead, who moved to New York a year ago to run Saatchi & Saatchi Advertising in North America, will oversee international operations.

Mr. Kershaw said he is talking to three international networks and hopes to finalize a deal by next week. He refused to name agencies or whether the deal would involve equity or merely an affiliation. Young & Rubicam repeatedly denied rumors it is talking with New Saatchi. True North Communications is known to be on the acquisition trail, but denied any contact with Saatchi.

A fast deal with an international network is essential for Maurice Saatchi to have any hope of clinching the $135 million British Airways and $45 million Qantas Airways accounts, both of which he will pitch in March against his former agency, J. Walter Thompson Co. and Bartle Bogle Hegarty.

"There is no way Maurice could go into that pitch without some kind of trading agreement," Mr. Kershaw said. It has to be at least "a trading relationship with a high-quality network."

He said the New Saatchi Agency's first two clients, publisher Mirror Group and Gallaher's Silk Cut cigarette business, represent about $45 million in billings and will move from Saatchi & Saatchi Advertising in March and July, respectively. Saatchi & Saatchi said the accounts' billings total about $22 million. Silk Cut is one of Saatchi's highest-profile creative accounts and is closely linked to Charles Saatchi.

Mr. Kershaw said the agency's only other source of funding comes from Maurice Saatchi, who he said is providing working capital from his personal wealth and not from money he may have received from a disputed $40 million settlement over a stake in German sports shoe group Adidas.

"If the agency did not win another piece of business for a year on top of these two pieces of business, it is viable for another year, based on revenues [from the two accounts] and Maurice's reasonably modest funding of it," Mr. Kershaw said.

Adam Crozier, joint chief executive of Saatchi & Saatchi Advertising, said the agency picked up its first new business since the executives left last month. The assignments total $45 million from Toyota Europe, Mirror Group cable TV, brewer Carlsberg-Tetley and dry cleaning chain Sketchley.

The new business was a welcome break from the storm buffeting the agency since Maurice Saatchi was ousted as chairman in December. Since then British Airways has gone into review and Mars Inc. has begun re-evaluating its $350 million business, although none of its major brands are expected to leave Saatchi & Saatchi Co.

After failing to win an injunction last week, Saatchi & Saatchi Co. is hitting back.

Saatchi passed information to the London Stock Exchange about what the company says was Maurice and Charles Saatchi's failure to notify the company when they allegedly benefited from the sale of 891,000 shares of Saatchi stock in December 1993. The brothers deny wrongdoing.

The company also filed suit against the brothers over the $40 million settlement they negotiated with Adidas Chairman Robert Louis-Dreyfus for giving up their small stake in Adidas. Saatchi wants at least some of the money. Separately, Saatchi is suing the brothers to prevent them from using the Saatchi name for their new agency, incorporated as Dress Rehearsal.

A spokesman for Maurice and Charles Saatchi said the brothers' investment in Adidas was "a purely private matter" and they will "vigorously defend" their right to use the Saatchi name.

The next lawsuit filed in the Saatchi vs. Saatchi fracas could come from Mr. Muirhead who, one industry executive said, is considering filing a countersuit against his former employer in the U.S.

Mr. Muirhead is said to be distressed about a $50 million suit Saatchi & Saatchi filed in New York state Supreme Court charging its erstwhile CEO of North America with breach of contract and theft of agency documents.

Alan Bishop, Saatchi & Saatchi North America's new CEO, has said he saw his friend leave in early January and that he wasn't toting agency property.

"The most important thing that went down the elevator was Bill Muirhead, not the files," said one industry observer.

Alice Z. Cuneo in San Francisco contributed to this story.

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