GroupM, the media-buying arm of WPP, the world’s largest advertising agency holding company, is suing Ebiquity’s FirmDecisions, alleging the auditing firm breached the confidentiality agreement signed between the pair.
GroupM handles about 30% of all media-buying money on the planet, by some counts.
FirmDecisions, a small UK-based firm, is employed by advertisers to assess whether they are getting the best value for money from their agencies, such as GroupM, which represents a group of global media and investment management agencies. Sometimes FirmDecisions’ media audits result in over-payments being returned to those advertisers, or contracts being renegotiated.
The suit will likely be seen by others in ad business as a sign that some agencies believes auditors’ roles ought to be carefully scrutinised.
FirmDecisions is also one of the firms that carried out the high-profile Association of National Advertisers (ANA) eight-month investigation into media agency rebates. The report has infuriated ad agencies, who say it accused them of wrongdoing without naming names. The GroupM legal complaint against FirmDecisions does not mention the ANA report and a source from WPP told Campaign the two things are not linked.
The first half of the ANA report, which was carried out by investigations firm K2, claimed “non-transparent” behaviour, such as agencies taking rebates from media companies and not disclosing them to their clients in order to make a higher margin on their fees, is “pervasive” in the industry.
FirmDecisions is expected to publish a list of recommendations to marketers following its findings as part of the investigation team within the next two weeks.
FirmDecisions says it was sent confidential information from GroupM “by mistake”
The legal complaint (you can read in full below), which was filed on May 31 at the Chancery Division of the High Court in London, alleges FirmDecisions CEO Stephen Broderick informed GroupM on May 5 that GroupM’s agencies had, on “four or five instances,” accidentally sent FirmDecisions confidential information from other clients “by mistake.”
According to the complaint, FirmDecisions then refused to provide GroupM details of each incident, nor a copy of the documents — despite WPP’s lawyers contacting Firm Decisions on May 11 requesting information about which documents were sent in error and when.
On May 27, FirmDecisions responded via letter to say the documents contained “minimal confidential information (as defined in the NDA) in its possession,” the suit says. FirmDecisions added that the documents had been deleted, but provided no further details about the incidents, the complaint says.
“NDA” refers to the non-disclosure agreement entered between FirmDecisons and GroupM in 2012, which requires that the auditing firm does not use confidential information for any purpose beyond the limited scope of its specific client audits.
GroupM claims in the suit that FirmDecisions “threatens and intends to retain and/or make use of the confidential documents … for its own purposes and/or to disclose the confidential documents … to third parties” and that this is of “grave concern.”
To back up this argument, GroupM also claims in the suit that it was aware of a senior FirmDecisions employee referring to one of the confidential documents and saying that it was “best to keep it up our sleeve to use when needed. I just don’t want to be seen in breach of the NDA [non-disclosure agreement].”
The lawsuit doesn’t make clear who the senior employee or was, or who they said it to.
In response to the complaint, FirmDecisions filed a defence with the court, which states, according to Campaign: “None of these incidents involved any breach or potential breach of the relevant NDAs by FirmDecisions.”
Campaign reports that FirmDecisions did admit an employee had mentioned keeping a document “up our sleeve” but said “the relevant employees had been reprimanded” and that the company had apologised about the incident at the time to GroupM’s agency MediaCom Australia.
The defence document lists several incidents when FirmDecisions received information from GroupM agencies in error between 2014 and 2016, Campaign reported.
GroupM is seeking an injunction to restrain FirmDecision from “misusing the confidential information.” It is also seeking an order to force FirmDecisions to disclose information about the incidents and it wants the auditor to reassure the company “on oath” that the confidential documents have been deleted.
GroupM says it will also seek damages should it discover it has suffered a loss as result of the incident, as well as legal costs.
Both GroupM and FirmDecisions declined to comment.
The full legal complaint from GroupM against FirmDecisions:
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.