Ad Doldrums Claim Another L.A. Victim : Advertising: Tiny Albright/Labhart will shut its doors later this month, the second Southern California shop to do so in the past six months.

The hard-hit Los Angeles advertising community has taken another one on the chin.

On Friday, the tiny but creative agency Albright/Labhart, which opened with some fanfare nearly a year ago, said it will stop operating as a full-service agency later this month.

The firm’s two founders, Michael Albright and Philip Labhart, have decided to separately open a small production shop and a creative consulting service. “It’s bad out there,” said Labhart, general manager of the agency. “With things the way they are, everyone is scrambling for work. You have to be creative to find a way to fit in.”

This marks the second Los Angeles agency to close within the past six months. In February, Abert Newhoff & Burr, a 7-year-old firm, also folded. With the advertising market in the doldrums, executives and consultants predict that more could follow.

“There are an awful lot of agencies having trouble,” said Jack Bernardy, chairman of the Los Angeles-based executive recruiting firm Brown/Bernardy. “Their clients are cutting, reducing and eliminating their advertising budgets.”

For Albright/Labhart, the problems have been many. The shop opened in November, 1989, about the time the nation’s advertising market was beginning to sour. Then, just a few months after opening, the agency entered a TV commercial in a competition even though the ad hadn’t been approved by the client, breaking at least the spirit of the contest’s rules. At the time, the agency denied that it had done anything wrong. Labhart now concedes, “It was bad judgment.”

But perhaps the really nagging problem for Albright and Labhart, both known for their creative work, was their lack of experience in purchasing magazine and newspaper space and TV and radio time.

The founders of Albright/Labhart insist that it isn’t just a lack of business that led to the decision to split up.

“We feel the trend in the industry is for clients to split their business among several specialists, rather than expect to find everything under one roof,” Albright said in a statement. “We always want to be on the leading edge, so for us this is a natural.”

Besides its two founders, the agency has just three full-time employees who will continue to work for the newly created production and consulting firms in some fashion.

The two men said their new firms will continue to create print ads for Ocean Pacific Sunwear and produce Nexxus TV spots for the hair-care product’s agency, RAO Communications.

“At one time, we thought we could become a big agency,” Labhart said. “But the business isn’t what we thought it was.”