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Corporate divorce.

Agency Splits Gave Birth To And Then Killed Resneck Stone Ward & Associates

Members of the Little Rock advertising community view the split of what was Resneck Stone Ward & Associates as ironic.

That's because the agency was formed seven years ago following a similar split.

Myron Resneck left Combs Resneck Stone & Associates to form his own agency with Larry Stone and Millie Ward.

Resneck operated a Memphis, Tenn., office when he was with the agency and negotiated with Combs to buy that office.

Negotiations broke down, and Resneck left without giving 90 days written notice, violating his fiduciary agreement with the Combs agency.

Combs sued Resneck and was awarded more than $100,000.

Move forward seven years.

"Different players," Stone says.

"Different case," Resneck says.

The details of the case may be different, but the turf is certainly the same.

"The two offices have been operating autonomously for at least two years," Stone says. "Management philosophies were growing apart."

"It seemed to make sense," Resneck says of the split.

He adds, "We got to a point that didn't seem reconcilable."

Several months of negotiations ended in an impasse. Neither Resneck nor Stone and Ward would accept the other's final offer.

An employment agreement between the three principals expired Sept. 30.

Stone, Ward and all but one employee from the Little Rock office resigned from RSW.

That was just the start.

Resneck filed a lawsuit against Stone and Ward. They settled out of court within a week, but the similarities between this case and Resneck's case with the Combs agency are striking.

Facilitating Negotiations

Vendors employed by RSW were notified by the newly created agency Stone & Ward that they would receive payment for services only by picking up cashier's checks personally from the bank.

In breaking with Combs, Resneck told the agency he was forced to write off agency fees after work for a major Memphis client was rejected.

Then, Resneck billed the client again when he opened his new agency.

The jury found that Resneck had diverted funds from his employer to his new company. That's why recently it looked to some as if Resneck were protecting his interests by putting money in the bank -- not in Stone's or Ward's hands -- to pay off vendors.

In his suit against Stone and Ward, Resneck alleged the two placed $636,903 worth of checks from clients in a petty cash account to pay vendors with cashier's checks without the Memphis office knowing what was happening.

According to the lawsuit, the process would "clean the slate" so the new agency would not owe vendors.

Now that an agreement has been reached, the parties are hesitant to discuss the lawsuit.

Resneck sued for $174,000 in damages along with $224,000 to be paid annually for two years. He also wanted a two-year injunction that would have prohibited Stone and Ward from dealing with clients ever associated with RSW.

Stone and Ward had signed an agreement saying they would not compete with Resneck for two years if they left the agency.

Consequently, Resneck was successful in receiving a restraining order prohibiting Stone and Ward from even speaking to clients who had followed them to their new agency.

Suddenly, however, a settlement was reached.

Resneck had significant leverage since he still occupied the Memphis and Little Rock offices.

Stone and Ward had the disadvantage of the restraining order and faced the potential struggle of preserving client relationships during what could have been a lengthy, heated trial.

Resneck would not have had all the advantages had the lawsuit gone to trial, though.

Little Rock clients clearly were behind Stone and Ward.

Their new agency received strong backing when former clients at RSW were contacted.

"They said it was our decision," says Stacey Berg, public relations officer for development at Winrock International Institute for Agricultural Development. "We could do what we wished."

Berg adds, "It wasn't a decision for us."

Steve Stephens, director of the corporate communications at Stephens Inc., says, "It was just by osmosis" that Stephens Inc. chose to stay with Stone and Ward.

"It's like a divorce," Stephens says. "It's not always pleasant."

Stone and Ward may have taken a gamble in testing Resneck. But that might also have been their way of facilitating stalled negotiations.

Although the lawsuit didn't surprise him, Stone says he wasn't sure what would happen once negotiations reached a stalemate.

Resneck says he considered everything from taking no action to filing the lawsuit. He decided the suit was the best option, possibly his way of facilitating negotiations.

New Beginnings

Stone & Ward should be settled into RSW's former Little Rock offices by today with the same clients and the same staff, minus one person.

Steven Brewster, a former public relations account executive for RSW's Little Rock office, is relocating to Resneck & Associates in Memphis to become its public relations director.

Resneck's current public relations director is resigning, and Brewster says he is taking the next step in his career. He claims the move isn't connected to the agency split.

In Little Rock, meanwhile, Stone has become chairman of Stone & Ward. Ward has taken the title of president.

Employees seem excited about the change.

Mimi San Pedro, a senior account manager with Stone & Ward, suggests news headlines of the change should read "Resneck Surrenders."

San Pedro asks why, if Stone and Ward were wrong, would Resneck have settled out of court instead of taking the suit to trial.

She also says to look for a new sign outside Stone & Ward's office in downtown's Heritage East Building.

Stone and Ward simply are looking forward to seeing the controversy -- and the news articles -- end.

They are ready for the attention to shift back to their clients.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:Millie Ward and Larry Stone leave Resneck Stone Ward & Associates to form Stone & Ward
Author:Rengers, Carrie
Publication:Arkansas Business
Date:Oct 14, 1991
Previous Article:John T. Hardin.
Next Article:The slump continues.

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