Acrimonious end to an ad deal turned sour

After a bitter courtroom battle with Publicis Groupe, the founders of Kitcatt Nohr Alexander Shaw scored a rare victory for the little guy.

As a complete layperson when it comes to matters of the law, it sometimes appears that legal redress is only for the super-rich. After all, one major consequence of austerity has been the restriction of professional legal support in many areas. If your cause isn’t viral-friendly enough for crowdsourcing and you don’t have the support of a multimillionaire fund manager, Justitia can feel as distant as Ancient Rome.

Now, I don’t think anyone could suggest that the founders of Kitcatt Nohr Alexander Shaw were underprivileged but their victory over Publicis Groupe demonstrates success isn’t always correlated to the depth of your pockets. At a costs management conference last year, Judge Waksman said the defendants’ costs appeared to "have been disproportionately incurred". Publicis Groupe’s costs totalled £1,339,992 versus the claimants’ £652,843.

Publicis Groupe bought KNAS in 2011 with the hope that the combination of its CRM experience and the digital expertise of Digitas would create a future-facing top-ten integrated agency. It wasn’t to be. The shop’s 150 staff at merger was reduced to 50 by the end of 2016. The chapter was finally closed last month with the announcement that both Kitcatt Nohr (as it is currently known) and Chemistry will merge into DigitasLBi to create a central CRM specialist division that will support Publicis Groupe’s other agencies.

The KNAS shareholders argued that Publicis Groupe – and its subsidiary MMS – had breached a buyer warranty. This warranty promised three named individuals did not know about anything that could have a "material adverse impact" on future earnings. Their case was that Publicis Groupe ad agencies were in the process of bringing digital work for Procter & Gamble – Digitas UK’s major client – in-house. This fact was known but not disclosed. The claimants additionally argued that a legally binding agreement ensuring the shareholders would still get an earn-out – on top of the first payment of £5m – was made in 2012.

In a 72-page judgment last week, Mr Justice Males found for the claimants in both cases. However, as the 2012 agreement was a settlement of the breach of warranty, he declined to give two sets of damages. He awarded the KNAS shareholders £2.6m after accepting MMS’s case that IT charges should not be excluded from the calculations. Males additionally argued that even if the award were under the buyer warranty breach, the claimants would not be entitled to any more cash as the decline attributable to the P&G brands was not the whole story.

Publicis Groupe took a disproportionate (there seems to be a pattern here) three days to get back to me with a brief comment. When it did, it described the verdict as "only a partial victory for the claimants" and took "some vindication" in the fact that they received far less than the £9m they were after. It seems to me a version of doublespeak. Yes, the KNAS shareholders failed to get all the cash they wanted but there is no debate that they won. 

Maybe those scales are in good working condition, after all.

Maisie McCabe is acting UK editor of Campaign. 

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