08 March 2006 | Rebecca Ellinor

Almost four out of 10 businesses using PR agencies do so without a contract, leaving them exposed to legal and commercial risk.

That was the finding of a study conducted by communications procurement consultancy Gyroscope. Tom Wells, managing partner, said in a statement: "We have been astonished by how often there is no current or effective legal basis to their dealings with PR agencies. When disputes arise, or when either party seeks to terminate the relationship, huge and expensive difficulties can result."

Gyroscope carried out a survey of 73 organisations that use PR agencies. It showed that 37 per cent have no contract with their agency - a move that Wells describes as "simply insane".

"To operate without the protection of a clear and mutual contract in an area which can involve not just millions of pounds but the very fabric of corporate reputation, is simply insane. It should be a matter of the deepest concern to procurement and communications professionals alike that such a huge proportion of the £5 billion per year PR industry's work has no contractual foundation," he said.

Gyroscope said often this happens because the newly appointed agency presents its standard contract and the client accepts it with the intention of checking with the legal department and then forgets.

SMmar2006