Practices Devoted to the Wine Business Take Root at Portland Law Firms
12/18/2009

Oregon winemakers are becoming a fertile source of income for a crush of attorneys.Dozens of Portland law firms have added wine-specific practices or added more clients to their existing practices.

Kell Alterman & Runstein LLP counts about a dozen wine industry clients and is trying to boost its wine law services.

In just three years of providing a wine specialty practice, Buckley LeChevallier PC has attracted 10 clients. It recently hired attorney Charlie Harrell, who represented several wineries and vineyards in a Newberg practice.

Bullivant Houser Bailey PC not only employs wine industry lawyers, its CEO Steve Kenyon owns Otis Kenyon Wine in the Walla Walla Valley.

"As the winery business grows and matures in Oregon, you get a need for lawyers who understand the business and can help out," said Bill Kabeiseman, a Portland-based Garvey Schubert Barer attorney who handles the firm's wine-related accounts. "We're seeing more of the wineries in the Yamhill Valley and Southern Oregon seeking advice from Portland firms."

Many of those clients contact Stoel Rives LLP and Davis Wright Tremaine LLP, which together represent more than 400 industry clients. Stoel's Chris Hermann and Davis Wright's Jesse Lyon are considered the city's preeminent wine industry legal experts.

"There's been a huge explosion of work," said Hermann, who's practiced wine law since 1987. "Wineries have done a great job of marketing pinot noir, and that means more international emphasis on Oregon wines. Which leads to more legal questions."

Wine client revenue is about the same as it is from other clients, with 30 percent margins on typical cases. Yet attorneys enjoy representing wineries for reasons beyond their proclivity for grapes. They embrace the challenge of a field that requires expertise in several areas, including real estate and contract law.

There's also the industry's growing volume. Oregon wine sales tripled since 2002, with nearly 1.8 million cases sold in 2008. Sales grew by 2.1 percent from 2007 to 2008. Oregon counts about 400 wineries, which create wine from grapes grown at vineyards.

"This is like Napa and Sonoma Valley 25 years ago," said Richard Mario, a Buckley LaChevallier partner who works on wine-specific contracts. "A lot of the wineries there were started by hobbyists who said 'this could be a real business.' We'll see much more growth in the next 10 years."

The state also recently began allowing more people to open their own wineries through "alternative proprietor relationships." The agreements allow existing winery owners, whose businesses are already bonded with the state, to rent space and equipment to other wine makers who market their own brands. The agreement allows new entrants to the wine business on a smaller scale without investing in equipment.

More entrepreneurs also joined the business through "custom-crush" arrangements. The deals allow customers to pay wine producers to make wine. The customers can then market it under their own brand.

"As the business has grown, a lot of firms have stumbled into wine law because they have clients who have opened wineries or vineyards," said Davis Wright's Lyon, whose firm's wine client base has grown tenfold since 1997. "But there are a lot of things they have to know. It's a heavily regulated business and they have to be very careful."

For instance, wine makers need help navigating Oregon's land use laws, a hot-button topic because of the state's strict zoning rules. Owners hoping to operate both a winery and a vineyard also need to jump through several hoops because commercial entities typically can't operate on agricultural lands near large urban areas.

The urban growth boundary can also prevent certain vineyards from providing tasting rooms near large urban areas.

Wine attorneys must also know trademark law. With so many wineries in the state, owners may generate similar marketing ideas. Jim Bernau, founder and president of Willamette Valley Vineyards Inc. and a client of Lyon's, said trademark protection by lawyers is critical to winemaking.

"They're the heavy and they have to be," said Bernau, who runs a $16.8 million publicly traded company in Turner. "They don't just represent me, they represent the shareholders and they are protecting the shareholders' investment."

Wine makers also must be careful to devise names that don't infringe on other trademarks, said Denise Gorrell, a Kell Alterman & Runstein attorney who specializes in the wine industry. Her firm's hospitality practice, which includes wine law, accounts for 10 percent of the firm's business.

Gorrell also helps clients address questions over labeling, overseen by the U.S. Alcohol and Tobacco Tax and Trade Bureau. The labels must disclose a wine's appellation and vintage date. If a wine is marketed as "organic," it must meet federal definitions regarding its production.

Outside Link
View article on Portland Wine Journal's website.