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In the summer of 2019, we reported that IPG, as part of its streamlining efforts, was creating an entertainment powerhouse by merging Rogers & Cowan, the storied pioneer of celebrity PR, with PMK-BNC, another one of Hollywood’s most prestigious PR firms. Mark Owens and Cindi Berger, then CEOs of Rogers & Cowan and PMK-BNC respectively, were tapped to lead the new organization, R&CPMK.

But as Variety and other entertainment trades reported during Thanksgiving week, this Tinseltown tale has taken a dramatic turn, with the next chapter set to unfold in bicoastal courts. R&CPMK is accusing Owens, who was fired earlier this year, of taking clients, staff, and confidential information on his way out to launch his rival firm, 2PM Sharp.

Cases like this are not unheard of in the PR industry—or any service industry for that matter—but this one is significant. R&CPMK claims it could lose “untold revenues from the loss of client business,” not to mention damage to its reputation and team morale.

To unpack the legalities of such defection cases and explore how agencies can safeguard themselves, I spoke with Michael Lasky, partner at the New York law firm of Davis+ Gilbert LLP, where he chairs the firm's Public Relations Law Practice and co-chairs its Litigation Practice.

Can you explain the R&CPMK lawsuit and its significance within the PR industry?

Certainly. The lawsuit revolves around the defection of senior employees from R&CPMK to a competing agency. At its core, it’s a dispute over alleged breaches of non-compete agreements, client solicitation clauses, and potentially misappropriated proprietary information. These issues strike at the heart of agency stability and client trust, which are foundational in PR.

What makes PR agencies vulnerable to defection cases like this?

PR is inherently a relationship-driven industry. Senior professionals often cultivate deep ties with clients, and when they leave, there’s an inclination for clients to follow. This creates tension between agencies seeking to protect their business interests and professionals wanting to maximize their careers. Non-compete and other types of post-employment restriction agreements are common, but they’re not always enforceable depending on jurisdiction.

What’s the legal framework behind such disputes?

These cases typically hinge on contract law. Employers argue that the departing employees violated their agreements, while employees might contest the validity of those agreements. There’s also the question of whether any confidential information or trade secrets were used to unfairly compete. Courts often examine whether restrictions are reasonable in scope and duration.

What’s at stake for agencies when these defections happen?

A lot. Agencies invest heavily in developing talent and client relationships. When key staff leave, there’s not only a potential loss of business but also reputational risk if it appears the agency can’t retain top talent. This can affect morale internally and create instability.

How can agencies mitigate the risk of such defections?

Prevention starts with clear and enforceable contracts. Agencies should also focus on fostering strong organizational culture and offering competitive compensation packages. Another approach is diversifying client relationships so that no single individual holds too much sway over key accounts. Regular communication about career growth can also help retain talent.

Are there broader implications for the PR industry from this lawsuit?

Absolutely. High-profile cases like this bring attention to the challenges agencies face in balancing talent mobility with protecting business interests. They can also influence how contracts are drafted and negotiated going forward. Ultimately, these cases highlight the importance of aligning incentives between agencies and their employees to avoid disputes altogether.

Could you elaborate on the frequency and nature of mass departures in relationship-driven industries?

Mass departures, or en masse walkouts, occur not only in PR but also in other relationship-driven industries such as financial services and accounting. These departures are often orchestrated over a short period and involve teams essential to servicing key accounts. When they occur, they can destabilize businesses, harm employee morale, and create significant challenges in client retention.

What best practices can firms adopt to safeguard against such incidents?

Companies first need to consider if the employee is working in a state in which some form of restrictive covenant is enforceable. If the state is restrictive covenants enforceable, companies should consider implementing tiered restrictive covenants tailored to the seniority and client access of employees. For instance, agreements might prohibit senior employees from soliciting or servicing specific clients for a reasonable period after departure. Employers can also require advance notice of resignation for senior roles, allowing time to transition client relationships. Additionally, limiting access to sensitive files, using digital safeguards, and clearly defining the undivided duty of loyalty can help prevent pre-departure misconduct. Regularly updating these policies to align with evolving state laws is crucial.

Does pursuing legal action pose risks for the agency initiating it?

Yes, there’s often a delicate balance to strike. Seeking injunctions or damages can signal instability, potentially affecting client confidence and employee morale. Agencies need to carefully assess the impact of public litigation and craft a strategy that addresses the harm while maintaining their reputation.

How difficult is a case like this to prove?

In all cases of this type, case will turn on the evidence to support or contradict the allegations in the case. This means the nature and extent of the evidence of pre-departure activities in violation of the fiduciary duties that employees may have owed to their employer. Many similar cases also depend on whether or not  the former employees used or disclosed confidential information belonging to their former employer,  and the specific evidence supporting those allegations.

Are there lessons to be drawn from past high-profile cases?

The Lord Geller case from the late 1980s is a notable example, where a mass departure led to significant litigation and a lengthy preliminary injunction hearing. Cases like these underscore the importance of having enforceable contracts and proactive safeguards in place. They also highlight the reputational risks and operational disruptions that can arise, demonstrating why prevention is often the best approach.