Fleishman-Hillard never expected its problems in Los Angeles to escalate to this level.Efforts to contain the brouhaha over so-called "pay-for-play" city business and related issues were ugly but seemingly confined to the already idiosyncratic market. A local spat only - embarrassing but not fatal to the whole organism. Containment has been the strategy from the beginning, and Richard Kline has not been joined by executives from St. Louis - including CEO John Graham - in publicly defending the firm's practices and ongoing investigation. Excerpts from an internal memo from Graham, though, did run in the Los Angeles Times and he is clearly reaching out to staff and clients. "Recent allegations about past events in our Los Angeles office are very disturbing," he wrote. "Because, if they are true, then a small group of people has violated what we stand for as an agency and put our most valuable asset - our reputation - at risk." Suspending former GM Doug Dowie with pay was a convincing public statement. Frankly, it was startling to find that, amid the allegations, his presence in front of clients and fellow employees was still considered tenable - particularly since Dowie's role had recently been converted to one that specifically spanned the whole agency, growing the public affairs practice. Individual offices within large agencies can have cultures all of their own, and it may seem possible to limit damage by isolating a problem when it erupts. But potential reputation damage, especially for a PR firm, is a potentially catastrophic virus that requires nothing less than a holistic strategy to combat it. I hope we hear positive news about how Fleishman is communicating with its clients outside the market, and with employees who are living the brand promise as it was intended. AAAA releases PR survey results The American Association of Advertising Agencies (AAAA) last week published results of a survey of member agencies to find out which have PR departments working with clients. Of the 168 firms that responded, 77% said they offer in-house PR services to clients. Ad agencies seemingly find PR a good little earner, with 68% saying it has higher profit margins than advertising. Richard Edelman, CEO of Edelman and a staunch voice for the PR industry's need to lead in the marketing mix, says ad agencies in the large holding companies might be better served by turning to their PR agency partners, rather than an in-house team. But his primary concern is that those marketing and delivering PR services be of a caliber that will truly represent the benefits of PR. David Kratz, CEO of Euro RSCG Magnet, who is on the AAAA committee that commissioned the survey, echoes that perspective. "When it comes to selling PR, PR people will do the best job of that," he says. "Sometimes the advertising side will ask for a PR program to be put together, and then try to sell it." Ad agencies offering PR must make sure they have the PR expertise to build these small departments into thriving profit centers. PR agencies, though they may bemoan the competition, will not benefit if poorly sold PR services damage the credibility of the discipline overall.