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Leonard Stein practiced law in the concrete canyons of downtown San Francisco for 18 years. He then rocketed through the tech space as general counsel at four e-commerce companies in five years. But these days, when Stein looks out his floor-to-ceiling office window, he’s neither gazing at the San Francisco skyline or onto the interior of some cubicle-filled dot-com enterprise. Instead he’s more likely to see rabbits racing through a vineyard or perhaps — on a winter’s day — the snow-capped peak of Mount St. Helena in California’s wine country. Stein’s fifth GC posting, at Santa Rosa’s Kendall-Jackson Wine Estates, is a world apart from his previous places of employment. Says Stein, “You can get dirt on your boots in this business.” Indeed, Stein occasionally does collect some dirt on his boots as he stomps around one of Kendall-Jackson’s numerous California vineyard properties. But more often, he can be found huddling with marketers and product development teams for a winery founded by attorney Jess Jackson and run by Jackson and his wife, former litigator Barbara Banke. Kendall-Jackson has operations on four continents, owns more than a half-dozen wine brands, and sells about 50 million bottles of wine each year. “Lenny works a lot of hours,” says Michael Newman, a partner in Holland & Knight’s San Francisco office and one of Kendall-Jackson’s outside attorneys. “This was supposed to be a lifestyle change for him. But he still works pretty hard.” Ever since a corporate headhunter helped place Stein at Kendall-Jackson in May, he has been drinking in the wine business, a heavily regulated industry undergoing waves of competitive change. Diving headlong into an industry has been a Stein hallmark during his dizzying journey through those previous GC posts. “Once you move inside, you have the opportunity to see the whole playing field,” he says. “You can put each individual legal judgment you are asked to exercise in the larger context of its importance to the business … You move from being a more episodic, transaction-based provider of services to becoming a strategic adviser.” There’s also the matter of dealing with yet another learning curve. “In the first six months here I sought to immerse myself in the business and the complex regulatory structure that affects it every day,” says Stein. “I don’t expect that learning to ever stop.” The competitive environment in the wine industry has shifted considerably in the past few years. Consolidation over the past decade or so has resulted in a dramatic reduction in the number of major beverage distributors. The rise of mega-retailers such as Costco and Wal-Mart have altered sales and marketing strategies. Inexpensive Australian wines, along with the consumer appeal of brands like Charles Shaw — better known as “Two Buck Chuck” — have upended the revenue-generating forces of the wine-drinking market. Along with all of these changes, the federal government in 2002 created a new regulatory agency for the beverage industry, the Tax and Trade Bureau, as part of the overall governmental reorganization surrounding homeland security. Kendall-Jackson’s rivals for shelf space include Robert Mondavi Corp., which was purchased in December by Constellation Brands, a company that already has a 200-plus brand profile of beer, wine and distilled spirits. Less than a week later, another international beverage heavyweight, Diageo, bought the Chalone Wine Group, which includes about a dozen California wine brands. Stein, with a sweater pulled over a button-down shirt in his modest Santa Rosa office, reels off a list of concerns that currently occupy his time. There’s the issue of interstate shipping of wine, which has landed before the U.S. Supreme Court and whose outcome will further alter the competitive landscape. Environmental matters have arisen over the fate of the tiger salamander, a threatened species with habitats at two Kendall-Jackson vineyards in Santa Barbara County, and the glassy-winged sharpshooter, a tiny pest that efficiently hosts a vine-killing disease that the U.S. Agriculture Department has spent tens of millions to control. Stein also regularly keeps an eye on potential trade infringement involving Kendall-Jackson brands. And, of course, there’s ongoing compliance with a raft of international, federal and state regulations on labeling and distribution. Kendall-Jackson handles its array of legal issues with four in-house lawyers, three compliance officers — a specialized sort of paralegal widely used by wineries — and two more general paralegals. Besides Stein, the in-house legal staff includes Vikki Adams, a former partner at Duane Morris, and Jeff Wesselkamper and Tiffanie deLiberti, both former associates at Latham & Watkins. The winery also employs a government affairs specialist, former winemaker Pete Downs, who worked on a voluntary deal struck in January with the U.S. Fish & Wildlife Service to protect tiger salamander habitat on properties where Kendall-Jackson wants to expand its vineyards. Stein says his typical day is spent “with people in our marketing group, reviewing proposals for new brands and marketing strategies. Or in discussion with our sales force regarding promotional plans and making sure the plans meet the many legal requirements of the states.” Complying with all of these requirements requires a lot of attentive legal work, says Ron Larson, general counsel at Napa Valley’s Sutter Home Estates. Larson, who first tapped Stein for regulatory work a decade ago when both were working at San Francisco firms, notes that alcohol products “cannot be marketed with the same promotional mechanisms that apply to general consumer products. You cannot pay a retailer to carry your product as you can in other industries. In many states you are not allowed to set shelving (where the product is placed in supermarket aisles). For a company that has international sales, the jurisdictions are many and different.” Larson describes Stein as a regulatory expert and says he “has a very pleasant combination of a high degree of intelligence in his craft and profession and is also broadly interested and aware as a human being. He knows a lot of things about a lot of things. That is what is necessary to succeed at upper management levels.” Stein, who graduated from Yale University and Harvard Law School, was first exposed to regulatory work at San Francisco’s Steefel, Levitt & Weiss, where he worked for 18 years after starting his career at Covington & Burling in Washington, D.C. Handling regulatory matters for a variety of manufacturers — American Home Products, Clorox, Snap-On Tools, Power Bar, Gerber, Panasonic and the 600-member National Food Processor Association — Stein gained expertise in labeling, distribution, pricing and Commerce Clause matters. He also got involved with litigation. Stein defended AHP (now Wyeth) in a failed pharmaceutical class action against more than two dozen name brand pharmaceutical companies. He worked for dairy distributors in a case regarding conflicting interstate laws on protein and nutrient levels and represented Quaker Oats in helping to shoot down a price-fixing case against cereal makers. “I defended the honor of Cap’n Crunch,” says Stein, whose office walls contain no wine-themed art but do include a museum-quality framed display of 12 cereal specimens — including Trix, Lucky Charms and Cap’n Crunch. Stein left Steefel in 1999 to become general counsel at Preview Travel, an early entrant in the online travel services sector. He was recruited for the GC post by David Pottruck, who was then chief executive officer of Charles Schwab Corp. and a member of Preview’s board of directors. Stein recalls Pottruck telling him that the GC job would provide a “skybox” view of life in the Internet world. “There was no better place to be situated to be doing the deals that would help define the shape of e-commerce,” says Stein. Not long after joining the company, he helped to negotiate a deal in which Preview — then the number three player in the field — was bought by industry leader Travelocity. Less than a year later, Stein became general counsel at Buzzsaw.com, a Web-based construction and building spin-off from Autodesk, the San Rafael-based software company. Buzzsaw, backed by an experienced management and investment team, was reacquired by Autodesk quickly after it was spun off. Marsha Sterling, Autodesk’s general counsel, worked with Stein on both ends of the dealings between the two companies. She describes him as “an affable guy. He’s not overly adversarial but is a good lawyer.” Like others who have worked with Stein, Sterling was struck by his appreciation for the substance of the business. She recalls a meeting that involved Autodesk’s reacquiring of Buzzsaw. “He was up there with management making a presentation not as a lawyer, but as someone who knew the business,” says Sterling. “He was very impressive.” Some months after the Autodesk-Buzzsaw reunification, Stein was on the move again. In December 2001 he became general counsel at QRS Corp., an e-commerce company focused on helping retailers operate more efficiently. He remained there for 16 months before joining Overture Services, a Web search firm that was gobbled up by Yahoo in a $1.6 billion deal just three months after Stein came on board. Martin Korman, a partner at Palo Alto’s Wilson Sonsini Goodrich & Rosati who was outside counsel for Overture, credits Stein with being a key liaison to Overture’s board of directors and “exhibiting a great deal of leadership and business judgment. Though his tenure with the company was relatively short, he understood very well the risks of the business and the opportunities.” Korman says Stein pushes people hard without micro-managing, watching closely enough to make sure his expectations are met. “We were teammates,” says Korman. “That’s the beauty of working with Lenny. There is no bright line between inside and outside counsel.” Stein’s legal journey through the Internet world — which he now describes as a “rocket ride” — came to an end in the wake of the Overture-Yahoo transaction. “These were high adrenaline, high complexity, high legal creativity types of positions,” he says. “I loved it.” At Kendall-Jackson, his legal career to a degree has come full circle. After all, his earlier expertise in food labeling matters is now back in play. “Coming to K-J is coming home to an area of law that was the foundation of my practice for many years,” he says, “in combination with some of the skills I acquired in my time with tech companies.” Although Stein is now a veteran of merging and acquiring his way out of a GC job, he is vague when asked if such high-stakes deal-making might be on the agenda for Kendall-Jackson. “Jess Jackson is a high-energy, focused businessman,” says Stein, “and he isn’t anywhere near done. The company continues to diversify and introduce new products and continues to innovate and lead in ways that are good for K-J and provide a leadership role in many issues of common interest to the industry.” Stein, for his part, seems focused on finding creative ways to get Kendall-Jackson products to market. The company owns its own distributing arm, Regal Wines, for shipping products within California and has dozens of key relationships with wholesalers and distributors around the country. Many industry observers believe the pending Supreme Court case on interstate shipping will have little effect on big players like Kendall-Jackson, which already has significant market penetration. Even so, Stein flew to Washington in December to hear oral arguments in the case, Granholm v. Heald. The case challenges the legality of laws in Michigan, New York and several other states that prohibit out-of-state wineries from shipping to residents of those states. “It was very valuable to hear how the individual members of the court thought about the issues, to hear their questions and comments on both sides,” says Stein. Stein’s learning curve has also included one of the best perks that his new industry has to offer — tasting some excellent and sought-after wines. Stein, who lives in San Francisco with his wife Janni, a former labor attorney at what is now Thelen Reid & Priest, and the youngest of their three children, recently attended a “90s party.” It wasn’t held in celebration of the decade, but instead was devoted to tasting wines that have earned ratings of 90 points or higher from critic Robert Parker. Stein makes no claims of possessing a great wine palate. But consistent with his legal work, he says, “I am an eager learner.” He’s taken a liking to Kendall-Jackson’s La Crema 9 Barrel pinot noir and both the 9 Barrel and Great Estates chardonnays. “I am an enthusiast who enjoys wine,” he says, “and am growing in my appreciation of wine.” Bill Kisliuk is a writer and editor in Napa.

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