SAATCHI COHORTS AWAIT COURT RULING

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LONDON-Maurice Saatchi will find out today whether three acolytes can join him in plans to create a new agency.

High Court Justice Jonathan Parker will decide whether to grant Saatchi & Saatchi Co.'s request to stop Bill Muirhead, former chairman-CEO of Saatchi & Saatchi Advertising North America; Jeremy Sinclair, the holding company's former acting chairman; and David Kershaw, former Saatchi & Saatchi Advertising U.K. chairman, from going to Mr. Saatchi's new agency until their current non-compete agreements expire. In Mr. Muirhead's case, that would be 1999; however, U.K. courts rarely enforce such limits longer than six months.

Because Mr. Saatchi was fired, it appears he is not bound by non-compete restrictions. But part of Saatchi's legal strategy is to tie Mr. Saatchi to the other three defendants, saying he is really competing on their behalf.

A separate suit filed in New York Supreme Court by Saatchi against Mr. Muirhead has been delayed pending the outcome of the European hearing.

During last week's hearing, it was revealed for the first time that the three men and the Saatchi brothers signed a binding agreement Jan. 8 to each in the future take a 20% stake in a new agency, using the Saatchi name. Charles Saatchi, Maurice's reclusive older brother who previously hadn't been linked to the new venture, was identified as a "backer." So far none of the five have officially subscribed for their shares.

Saatchi immediately filed a writ against Charles Saatchi, who has four years remaining on his five-year contract as Saatchi president, a largely honorary post with an annual salary of $470,000.

Mr. Saatchi's attorney read a five-line affidavit in court denying his client is financing the new agency although he plans to become a shareholder at some point.

In perhaps the understatement of the year, Saatchi said it would certainly not be renewing Charles' contract.

Saatchi's board in December ousted Maurice Saatchi as chairman, and said the Saatchi name would be stricken from both the holding company and the agency network. Mr. Saatchi responded in January by announcing formation of a new shop, initially dubbed the New Saatchi Agency.

Already the shop has been invited to the British Airways' review, a key Saatchi client. In court, a Saatchi lawyer said $500 million in business could be at risk.

Pending a spring trial, the judge has three options. The most severe would be an injunction preventing Maurice Saatchi and the other three defendants from operating before the trial. He could also leave Mr. Saatchi free to operate but enjoin the others from working with him.

If the judge doesn't grant an injunction, Messrs. Muirhead, Kershaw and Sinclair could begin limited activities for the new agency such as talking to non-Saatchi clients. Mr. Saatchi would therefore remain free to pursue Saatchi clients and staff.

The key issue at the hearing was whether the trio are simply preparing for new jobs when their contracts with Saatchi end or are breaching their contracts, with Mr. Saatchi's encouragement.

"This is simply a back door way of obtaining an [non-competition] injunction against Mr. Saatchi," said Michael Burton, representing Messrs. Sinclair, Muirhead and Kershaw.

"He is entitled to inflict as much loss [on Saatchi] as he wishes through legitimate competition," Mr. Saatchi's attorney Gordon Pollock said in court.

Saatchi & Saatchi Co. attorney Charles Gray said that Mr. Saatchi is free to compete. But he argued everything Mr. Saatchi does will benefit his future partners.

Saatchi Chief Operating Officer Wendy Smyth said in her affidavit Mr. Saatchi precipitated a "bidding war" by offering Saatchi staffers a 10% bonus as part of a "calculated plan" to set up his new agency.

"Of course it's a calculated plan," Mr. Pollock said. "We wouldn't want it to be a random plan."

Messrs. Muirhead and Kershaw, until then seated glumly in the back of the courtroom with Mr. Sinclair, doubled over with laughter.

Mr. Saatchi did not appear in court, although he made a rare public appearance Feb. 8 to address the Foreign Press Association on "Truth in Advertising." During the session he refused to answer questions on the record.

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