SAATCHI LEGAL SAGA NEARS TURNING POINT

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LONDON-In the Saatchi vs. Saatchi legal game of poker, it's time for both sides to show their hands before deciding about going ahead with a full trial next month.

Although neither side will publicly admit it, the betting is that a settlement is likely before the three-week trial is scheduled to start June 12, the day before Cordiant's annual meeting.

Cordiant and the New Saatchi Agency are expected to complete the last major pre-trial step of exchanging witness statements this week.

"It's sort of cards on the table," said Stephen Groom, a partner at Lewis Silkin, a London law firm that has a large advertising practice but is not acting for either side in the Saatchi dispute. The exchange of statements is "the point at which you must disclose the evidence in chief of all witnesses you are proposing to call at trial. It's designed to avoid trial by ambush."

The June trial, one of several separate legal actions, is to decide when three former top Saatchi & Saatchi executives can fully join Mr. Saatchi's New Saatchi Agency as partners. Bill Muirhead, Jeremy Sinclair and David Kershaw left Saatchi in January but are restrained by employment contracts with non-compete clauses lasting up to two years.

In practice, U.K. courts generally refuse to uphold non-compete agreements for longer than six months, so the three men are likely to be free in July whether an expensive trial is held or not. As for Cordiant, part of the value of sidelining his future partners was to hinder Mr. Saatchi's pitches for British Airways and other Saatchi & Saatchi Advertising accounts. But Mr. Saatchi has won those reviews anyway.

London's High Court, where the trial would be held, has already been less than sympathetic to Cordiant's case. At a preliminary hearing in February that racked up an estimated $150,000 in total legal bills for both sides, the judge refused to restrict Mr. Saatchi's agency-building and client-winning efforts. He also ruled that Messrs. Muirhead, Sinclair and Kershaw could take "preparatory steps" to go into business as long as they did not solicit Saatchi clients or staff themselves.

Keeping at least to the letter of the law, the three men skulk around to avoid running into people they aren't supposed to talk to. Unable to appear publicly at the British Airways pitch despite their key roles in masterminding the account before they left Saatchi, they appeared alongside Maurice as life-size cardboard cutouts.

The three real men even hang out in a separate office nearby, dubbed the Garden Shed after the English expression "gardening leave," used to refer to executives sitting out non-compete clauses before legally switching jobs.

"The odds are it'll come to trial," said Charlie Scott, Cordiant's chief executive. However, he added, "We're not going to keep litigation going just for the sake of litigation."

If any settlement is reached, it may also cover two other legal disputes. One is over Mr. Saatchi's right to use the Saatchi name in his new agency's title.

"Saatchi & Saatchi is a big brand name in advertising," Mr. Scott said. "As long as there's no confusion between the name they choose to call themselves and Saatchi & Saatchi, it would be fine."

The other main suit concerns a $38 million settlement Maurice and Charles Saatchi won from Adidas Chairman Robert Louis-Dreyfus in return for relinquishing stock options when Mr. Louis-Dreyfus bought Adidas at the end of 1994. Cordiant is claiming the company has a claim on the money, now in escrow.

Settlement or courtroom drama? The lawyers aren't telling.

"It'll be one or the other," said one Cordiant lawyer.

Jan Jaben in Chicago contributed to this story.

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