Advertising Agencies: Your Client’s Lawyers Work For Them, Not You

50's TV commercial

By: Brian J. Meli

There’s a dangerous and all too common perception in the advertising industry that the client’s legal department has the agency’s back. On this subject I won’t mince words: they don’t. Your typical agency account director will fervently argue she’s developed a very close, strategic partnership with her clients that’s built on mutual trust. And my response to her is: it doesn’t matter; they still don’t.

I can say so without hesitation because the rules governing attorney ethical conduct demand that they don’t.

It may help agency folks sleep at night to believe their creative product complies with all laws and regulations because their client’s legal team reviewed it, but that can be a very dangerous false sense of security. The client’s attorneys have an obligation to protect the interests of the client, and when those interests happen to align with the agency’s, then all is well and good. But any such alignment is merely incidental, and the moment those interests diverge, the most loyal and well-regarded agency can quickly find itself in the role of scapegoat. Or worse yet, defendant.

The reason for this is a legal concept called joint liability, which holds that responsibility for a wrongful act can be apportioned among more than one party—and to a degree that corresponds to each party’s comparative level of fault. For an ad agency, this means that if it assisted in preparing an ad that’s the subject of a dispute, and it knew or should have known about the issue prior to the ad running, the agency will bear at least partial responsibility for it. In other words, just because it’s the client’s name in the ad, that doesn’t mean the agency’s off the hook if things go south.

Client and agency are routinely held jointly responsible when an ad runs afoul of the law; most commonly when claims are made that are false, deceptive or misleading; or when advertising contains intellectual property (copyrights or trademarks) that have been misappropriated. When this happens the plaintiff—whether it’s a consumer protection/law enforcement agency, or a private third party who’s been injured—seeks damages from both client and agency, setting up a potentially ugly blame game between those two formerly close strategic partners.

The client’s lawyers know how this game is played of course, which is why they try to minimize their own risk by shifting as much of it as possible to their agencies and various other content providers right up front; requiring warranties, indemnifications and other enforceable promises from them before they start work. And so, once the time comes to review the final creative product, the lawyers doing the reviewing know exactly where their client’s liability ends and the agency’s begins.

This is why I bristle when agencies tell me they know their advertising is compliant and risk-free, simply because it’s been approved by the client’s top-notch legal team. It’s true, the lawyer who has placed her stamp of approval on that new TV spot has declared it within the range of acceptable risk. The issue is, whose risk? Even if the client’s counsel is second-to-none, their involvement doesn’t lower the agency’s risk exposure. In fact, it may increase it, because the more skilled the client’s counsel is, the more risk they may successfully shift to their vendors. What’s more—because one of the requirements for an agency to be found jointly liable for wrongdoing is a significant degree of involvement in the preparation of an ad—the more deeply involved the agency is in the strategic planning and crafting of a message, the deeper its liability runs. Therefore, it follows that the closer and more collaborative the agency/client relationship is, the more risk the agency assumes.

Clients don’t hesitate to bring claims directly against agencies for alleged breaches of contractual promises and to enforce warranties to recover damages incurred by suspect advertising. But even if your client forgoes taking legal action, they could very well see it as their right to withhold hard-earned agency fees. And they probably won’t be quick to give additional projects to an agency whose work is the subject of a legal challenge. So any way you cut it, it’s a tough spot for an agency to find itself in.

This isn’t to say that clients shouldn’t be trusted. Obviously a certain level of trust is an essential component of any successful business relationship. But it bears repeating that the alignment of business interests does not equal the alignment of legal interests. And even the best strategic partners can be guilty of finger pointing when things go bad.

The bottom line: your clients and their lawyers are looking out for their interests, exactly as they should be. So you and your agency should be doing the same.

The content of this blog is intended for informational purposes only. The information provided in this blog is not intended to and does not constitute legal advice, and your use of this blog does not create an attorney-client relationship between you and Brian J. Meli. Under the rules of certain jurisdictions, the material included in this blog may constitute attorney advertising. Prior results do not guarantee a similar outcome. Every case is different and the results obtained in your case may be different.

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