sabre ratlling!
Whats the £2000 lawyers fees - surely not just for a letter?
I am not legally upto speed on this, but if you use their name in a adwords, you are not stealing or misusing their name.
As far as 'passing off', as you do not claim to be that company or visibly use their name on your site (I assume) you cant be accused of that.
In the UK, I believe that this is legally untested.
Have a look here:
https://adwords.google.com/support/b...92877&hl=en_GB