Huntsworth, the public relations group that owns the Citigate, Red and Grayling agencies, has set aside £1m as it is suing some former staff who have broken "non-compete" rules.
"If people do not abide by non-competes and non-solicitations that they have with us, we take action," its chief executive Lord Chadlington said yesterday, although he did not identify the former employees or their new agency.
Lord Chadlington was optimistic about winning the case and recovering some of the costs, but said he wanted to be open with shareholders about the potential £1m bill.
Huntsworth's annual profits halved to £10.6m after it lost £4m of project work last year and had to cut jobs. It is now focusing on global, long-running, multi-office deals with clients because they are more stable.
Like-for-like revenues have risen by 3 per cent in the first quarter, although Lord Chadlington warned that clients still feel "pretty nervous".
He is sceptical that the Diamond Jubilee and Olympics will provide much of a lift.