The price of advertising

The decision of two-partner personal injury firm Underwoods to spend £350,000 on a primetime ITV advertising campaign last month, raised the prospect of large-scale advertising by UK firms. In the US, 85 per cent of law firms advertise but the UK take-up of the tool has been reticent since advertising rules were relaxed in the late 1980s. The most bullish advertisers are personal injury firms like Underwoods, whose television slogan is: "Underwoods work harder to win because if we don't win, we don't get paid."

Many firms advertise in specific trade publications and nearly all run recruitment advertisements, but few have run general campaigns aimed at creating a corporate brand. However, UK commercial firms are slowly realising that advertising is not necessarily restricted to private client work and that it may have a significant impact on businesses.

The effect of advertising on businesses is notoriously difficult to quantify. Even the Direct Marketing Association has been unable to compile statistics on the subject. Most UK firms are filled with horror at the idea of spending the £4m to £5m per year necessary for an advertising campaign that can achieve widespread brand recognition. Even magic circle firms privately say that they do not have this kind of money, unlike their blue chip investment bank clients, which are much bolder users of advertising campaigns.

Some top law firms believe that banks effectively advertise on lawyers' behalf, winning transactional work through advertising which is then passed on to their panel law firms. In addition, while banks can advertise the fact that they put together particular transactions, client confidentiality prevents lawyers from doing the same.

Law firms that do not desire a weekly slot in the Financial Times, but do occasionally want to remind the business world of their presence, are limited in the events which they can advertise around. On 1 August, Freshfields ran advertisements in several UK and German newspapers celebrating its merger. Clifford Chance did the same when it merged with Rogers & Wells and Pünder Volhard Weber & Axster in January, proclaiming "law to the power of three" in the Financial Times, The Economist and The Wall Street Journal, and Allen & Overy advertised when it won the Queens Award for Export Achievement in April last year.

An important element of this type of "tombstone" advertisement is to generate not new business but a feel-good factor within the firm. Hildebrandt International consultant Francis Quinlan says: "For law firms, advertising is generally self delusion. Apart from recruitment advertising, which is important in setting the tone and style of a firm, advertising is a fatuous waste of time unless you spend proper money on it. The only people who have done so are firms like Arthur Andersen and JP Morgan. I haven't yet seen a law firm spend enough money in a consistent enough manner to do the job properly. They're throwing their money away for the sake of internal pazzazz."

At the end of July, Herbert Smith announced that it had established a formal relationship with German firm Gleiss Lutz Hootz Hirsch but no advertisement was placed. The firm's head of marketing Barry Jackson says: "I don't think anyone will call lawyers because they've seen a tombstone advertisement. If you're advertising a particular event you need to create something interesting around what the development is bringing to the business."

Herbert Smith ran a sustained advertising campaign for three months last autumn in the Financial Times and the Evening Standard, featuring images of jump leads, bricks, whistles and compasses, promoting practice areas such as corporate finance and M&A. Jackson comes from an accountancy background with Arthur Andersen, one of the only UK professional services firms to spend millions on advertising.

Jackson says: "We didn't spend much money on the Herbert Smith campaign. It was really just a toe in the water to see whether the firm was ready for it and to see how the market would respond. Afterwards we talked to in-house lawyers and company secretaries who all thought our approach was clear and refreshing. Internally, the older partners were not particularly in favour of the concept of advertising. But the general consensus is that it was successful and that we'll carry on doing it."

But attempting to create an international brand can be both expensive and risky. While it is invigorating for a firm to find itself in the unusual position of being completely in control of the image it projects, the projection can seem like an unfocused way to develop the business. Clifford Chance media relations manager Tom Rose says: "Bearing in mind how small our audience is – in-house lawyers and board directors of cross-border organisations – the power of advertising for us is heavily limited."

But in-house lawyers are unlikely to admit that they are influenced by advertising when choosing the guest list for a beauty parade. British Nuclear Fuels' Edward Smethurst, the former chair of the Law Society commerce and industry group, says: "In-house lawyers are professional, sophisticated purchasers of legal services – they know the individuals within the firms who they want to instruct and advertising has very little importance to them. The boards aren't influenced by advertising, they listen to their in-house lawyers."

However, many people believe that directors are influenced by advertising. Those whose companies are themselves big spenders on advertising have a greater respect for firms which also advertise. It is argued that a legitimate way to reach the select audience of in-house lawyers at multinationals is to make every person in the country familiar with a firm's brand. Lower down the market, differentiation from the crowd of medium-sized City firms becomes an issue when in-house lawyers approach their boards.

Rowe & Maw has been advertising regularly in the Financial Times and The Times since 1995, and more recently in the Evening Standard. The firm's marketing director Chris Pullen says: "Before we began advertising we did a client survey. The result was basically – Rowe & Who? The in-house lawyers who instructed us did not feel we had sufficient profile. For this reason, it was difficult for them to recommend using us to their board and senior management. Over the years, feedback from clients has showed us that advertising can work and that it's just as important for retaining existing clients as it is for generating new business."

Hammond Suddards is another firm outside the magic circle which has spent a substantial amount on advertising this year, causing a splash by spending £1m on a marketing campaign and above the line advertising through Saatchi & Saatchi offshoot Team Saatchi, which coined the copy: "Should we sue our advertising agency? They said full pages in The Times would make us a very famous law firm. If it doesn't, you can take us to court." The firm is currently rethinking its advertising strategy following this month's merger with Edge Ellison. Last month, Hammonds joined a group of Manchester professional services firms including Eversheds, DLA and Berrymans Lace Mawer, to launch a poster campaign aimed at local businesses.

In a market that is increasingly competitive, particularly in big ticket corporate finance work, firms are struggling to differentiate themselves. In the US, the trade press is crammed full of lawyers' advertising. The Washington Business Journal (WBJ) says that legal advertisements are its fastest growing category, and law firms are making an enormous push towards national magazines, with some spending at least half their advertising budgets in markets outside the US.

The head of client development at the American Bar Association William Hornsy says: "American firms need to differentiate themselves and make sure that corporate counsel know they are there, particularly in the fields of intellectual property and e-commerce. New businesses are starting up, corporate counsel are increasingly mobile, and law firms are merging at an accelerated rate. They need advertising to bring them together."

Publisher of the WBJ Darryl Cross says: "When a firm is on a short list for a panel the list is defined by advertising. It allows the firms to summarise who they are, what clients they deal with and how they can help the company."

In Scotland, where legal advertising has for some time been far more prevalent than it is in England and Wales, firms are getting tired of being phoned by advertising salesmen and told they have to buy some space in a forthcoming issue because all their competitors have done so. A spokesperson for Edinburgh-based commercial practice Burness says: "Just because everyone else is advertising it doesn't mean it works. Our advertising spend was enormous, so we did an analysis to make sure we were hitting the right targets. We're now of the opinion that we would get more response from targeted direct mail."

This opinion is shared by the marketing department at DJ Freeman, the firm which last year won The Lawyer Awards' Best Corporate Brand. The firm's chief executive Jonathan Lewis says: "We advertise very selectively in the trade press for specific practice areas but we don't think that general branding exercises via advertising are value for money. We think other elements of marketing give better value."