Securing enough North Coast grapes to supply growing consumer demand for wine is spurring growth in staffing and services among some North Bay law firms that serve the industry, all of which is helping the legal industry rebound after several years of static business.
[caption id="attachment_67584" align="alignright" width="284"] Clockwise from left: Nick Donovan, Wendy Whitson, Katherine Philippakis, Scott Gerien[/caption]
Fine-wine sales took a significant hit following the economic crash of 2008, and two difficult North Coast winegrape harvests added further uncertainty about supply. But as the economic recession recedes and after what's thought to be a banner harvest in 2012, a few visible trends are emerging and creating demand among law firms: a spike in mergers-and-acquisitions activity and an anticipated grape shortage that has wineries looking to secure their own supplies.
"A lot of it has to do with the fact that there's a grape shortage, so what a lot of producers are doing is trying to lock up their grape supplies," said Nick Donovan, a partner at Napa-based Gaw Van Male. The firm added six attorneys over the last six months across multiple practice areas in response to the demand, Mr. Donovan said. The wine practice has grown by about 40 percent over the year. The firm plans to hire two more attorneys directly out of law school in 2013, Mr. Donavan said, both in the wine practice.
With the grape shortage come acquisitions of either land or other wineries, and with the acquisitions comes a need for legal counsel in a number of areas, ranging from grape contracts, real estate holdings, succession and estate planning. Brand extension and trademark applications are also on the rise, attorneys said.
Another Napa law firm, Dickenson Peatman & Fogarty, has experienced similar growth, adding five attorneys over the last six months, with plans of possibly adding more in its Santa Rosa office in 2013. About 70 percent of the firm's business is related to the wine industry, and the aforementioned trends are driving the growth, according to Scott Gerien, co-managing partner.
"At DP&F, some of the most significant business was probably driven by acquisitions of assets and property, as well as things like brand extension," Mr. Gerien said. "For instance, our representation of Accolade in its acquisition of some of the Ascentia assets was a major project, and this type of deal also shows off additional subsequent work, such as license transfers with (Alcohol and Tobacco Tax and Trade Bureau) and (Alcohol Beverage Control), new employment agreements, land use work and trademark portfolio maintenance."
Accolade Wines of Australia in June acquired wine brands Geyser Peak and XYZ Zin in Sonoma County and Atlas Peak in Napa Valley from Healdsburg-based Ascentia Wine Estates.
Regarding brand extension, a good gauge is the number of trademark applications filed for alcohol beverage products with the U.S. Patent and Trademark Office, Mr. Gerien said. Last year, 7,534 applications were filed with the office, compared with 7,081 in 2011 and 6,011 in 2010.
"So you can see that as anecdotal evidence related to the continued introduction of new brands," he said.
The trend is not isolated to wine-specific legal practices, either, according to Wendy Whitson, managing director of Santa Rosa-based Anderson Zeigler Disharoon Gallagher & Gray, a full-service firm with numerous practice areas.
Ms. Whitson, who specializes in real estate transactions, said the recent spate of acquisitions underscores the importance of the wine industry in Sonoma and Napa counties, given its ability to impact law, finance and many other industries.