Boutique law firm knows ins and stouts of liquor licensing

| Tuesday, Feb. 28, 2012

A stroll through the halls of Flaherty & O'Hara's offices Downtown reveals conference room names such as Gimlet, Speak-easy, Absinthe and Usquebaugh.

All clues to the boutique law firm's unique niche: Liquor licensing. It claims to be the only law firm in the country whose services revolve solely around the esoteric practice of securing liquor licenses for restaurants, hotels, stadiums and other establishments.

"Other firms do liquor licensing but with just a couple of attorneys and working only in their own state," said Mark Flaherty from the firm's third-floor office at Sixth Avenue and Smithfield Street. "Nobody does this in as many states (all but North Dakota) as we do."

Flaherty & O'Hara moved into its 13,000-square-foot space from much smaller quarters a few blocks away in August 2008 -- "a month before the stock market crashed," Flaherty said. As the firm had already committed to the new space months earlier, it was stuck facing much higher overhead amid growing economic uncertainty.

"We were scared," said R.J. O'Hara, noting the firm was forced to lay off four clerks at the time.

"But we're back to hiring again now," he said. "We just hired a clerk a month ago, and we're interviewing now for a law clerk."

With the end of Prohibition in 1933, the retailing end of the alcohol industry remained a heavily regulated industry but much of the authority shifted from the federal to the state and local levels, Flaherty said. That change meant that restaurants, hotels and others selling liquor in multiple counties and states had to obtain myriad licenses in many jurisdictions.

"We go to lots of local hearings," said O'Hara, who is a beer drinker. Partner Flaherty is a teatotaler. He's not related to former Allegheny County Controller Mark Patrick Flaherty.

Flaherty & O'Hara manages to stay atop the "incredibly time-consuming and detail-oriented" licensing and compliance issues by coordinating with a network of attorneys at about 50 small law firms scattered across the country, O'Hara said.

For instance, most states require a "mixed-beverage, on-premises" license from someone wanting to sell beer, wine and spirits. Pennsylvania requires a "restaurant liquor license."

In Pennsylvania, state law allows no more than one liquor license per 3,000 population per county. Plus, a municipality determines whether an operator may transfer a license into its jurisdiction, said O'Hara. Other states have different quotas, and some states have none at all.

The virtually finite number of liquor licenses in Pennsylvania makes them valuable assets to buy and sell, depending on a county's number of residents and population growth rates. A license sells for $55,000 to $60,000 in Allegheny County, and $30,000 to $40,000 in Westmoreland County, Flaherty said. But a liquor license goes for about $250,000 in Chester and Montgomery counties in the Philadelphia market.

"It's supply and demand," said Flaherty, whose late father had been a Pennsylvania Liquor Control Board agent.

Restaurateur Cara Del Signore had never dealt with liquor licensing until a few months ago. She wanted to move her BYOB restaurant in Bloomfield to a new location in the South Side that would sell liquor.

She wanted Stagioni restaurant to sell liquor to patrons and to open in time for Valentine's Day. Trouble was, it usually takes about 60 days to accomplish, and she didn't meet with Flaherty until December.

"Mark got us our license in 32 days, which is pretty remarkable," Del Signore said. "The funny thing was that we got the license before Valentine's Day, but weren't able to open until Feb. 21 because we still didn't have all the furnishings we needed yet."

Flaherty & O'Hara over the years has had some high-profile clients. For example, it represented Bill Gates in 2007 when the Microsoft chairman, plus a Saudi prince, acquired Four Seasons Hotels Inc., the chain of luxury hotels., for almost $3.4 billion.

Closer to home, Flaherty & O'Hara represented PNC Financial Services Group and Fairmont Hotels & Resorts two years ago when the Downtown hotel opened in the new office tower owned by PNC.

Flaherty & O'Hara also represents Darden Restaurants Inc., "which has about 60,000 workers who sell liquor at any given time," at 1,900 well-known restaurants such as Red Lobster and Olive Garden, O'Hara said. Other clients include Houlihan's Restaurant Group, Dave & Busters, Quaker Steak & Lube and Aramark Corp., which runs the food and beverage operations at PNC Park, Consol Energy Center and Heinz Field.

Beer distributor Michael Magnotto said he had used three other law firms for his liquor sales compliance needs over the past 25 years. But the owner of M&M Beverage Co. in Hermitage, Mercer County, said none compared to Flaherty and O'Hara's expertise.

Magnotto wanted to introduce retail customers to different micro brews by serving them in tasting sessions he would host. In working with the law firm, he found Pennsylvania law dictates wholesalers serve no more than four ounces of beer to retailers as a sample.

"They're the only law firm I'm aware of that understands the complexity of the Pennsylvania liquor laws," Magnotto said.

Additional Information:

About Flaherty & O'Hara, PC

Business: Boutique law firm with a nationwide concentration in liquor licensing

Headquarters: Downtown

Employment : 23, including eight attorneys

Founded: March 2000

Revenue: About $4 million in 2011

Top officers: Name partners Mark Flaherty and R.J. O'Hara

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