The fledgling operation, to be called Grounds Morris Smith, begins life with two unnamed clients.
Its formation comes 17 months after the demise of Smith's former shop, Rapley Smith & Jones. It folded after less than a year in business, having been beaten by Fallon in a pitch for the £70 million pan-European Sony Electronics account.
Smith, a former Bartle Bogle Hegarty deputy chairman, said the start-up aimed to bring simplicity and experience back to the business. "There would appear to be a gap in the market for clients looking for hands-on commitment outside the Big Five," he said. "Clients are becoming concerned by the lack of choice."
Grounds and Morris quit as the creative directors of the through-the-line agency Edge/gmc in the summer of 2002 after a disagreement over the agency's creative direction.
Grounds and Morris were among the leading advocates of an abortive attempt to establish creative independents as a serious force in UK advertising in the mid-90s. Grounds said: "The world has moved on and there is a real hunger for agencies that are run for their clients rather than themselves."