Lowe breakaway shop gains direct momentum

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After last week's settlement of a lawsuit with their former employer, the founders of Lieber, Levett, Koenig, Farese & Babcock appear well on their way to becoming a force in integrated direct marketing.

The new agency, formed in mid-October after the five name principals left top jobs at Lowe Direct, agreed last week not to solicit any more Lowe Direct clients or employees, and to pay an unspecified amount in compensation to Lowe Direct.


But it apparently will keep those accounts it already had taken, including a $15 million Merck & Co. assignment and the holiday direct campaign for Dell Computer Corp. Lieber Levett also remains in contention for Roche Laboratories' $45 million account for anti-obesity drug Xenical, said insiders at the two agencies, both in New York.

Lowe Direct won that account the week before Lieber Levett was formed, but since then Roche executives have been trying to determine whether Lowe Direct can adequately staff the account before signing a contract. Roche executives couldn't be reached last week.

Xenical would represent more than a third of Lowe Direct's billings. According to Lowe Direct's lawsuit, 15 of 63 staffers had defected to Lieber Levett as of Oct. 31. Those employees are free to stay at Lieber Levett, according to the settlement. Other specific terms of the settlement were not disclosed, and neither party would comment beyond a press release issued by Lowe Direct.

Lieber Levett declined to identify any of its clients, though Chairman-CEO Robert Lieber said he hopes to announce a high-tech client--not from Lowe Direct--this week. Lowe Direct's lawsuit provided the first report of Merck's move to Lieber Levett (AA, Oct. 28). Facing time pressure, Dell moved its fourth-quarter campaign because Lieber Levett employees were the ones who had been working on it.


Mr. Lieber visited Dell in Austin, Texas, on Nov. 21. Whether Dell will move to Lieber Levett permanently in '97 hasn't been determined; it might hold a review between the two agencies, according to executives close to Dell.

In effect, Roche Laboratories is holding an informal review between the two agencies for Xenical. Lowe executives remain optimistic about their chances, noting they wouldn't have settled so quickly if they believed the account was lost.


Marvin Sloves, co-chairman of Lowe Direct's parent, Lowe & Partners/SMS, said in the press release that Lowe achieved "virtually everything [it] had been seeking" with the lawsuit.

As spelled out in court papers, the lawsuit's primary aims were a permanent injunction against the new agency and punitive damages of $50 million. But the "unspecified amount" Lieber Levett will pay to Lowe is far less than $50 million, insiders agreed.

Mr. Lieber said, "We're really glad to put this behind us. We're doing really well on the new business front."

Copyright November 1996, Crain Communications Inc.

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