By Steven T. Taylor

Known far and wide in the dynamic hospitality industry for his successful and strategic approach, ability to handle complex circumstances, and winning personality, Jim Butler hasn’t lost a step after decades of serving clients and helping hotel businesses thrive. In fact, the name partner at Jeffer Mangels Butler & Mitchell, a firm with offices in Los Angeles, San Francisco, and Orange County, is as busy as ever.

While Butler and his team work on and close many transactions, they also handle the full spectrum of issues that arise in the hospitality industry.

Those they represent around the negotiation table and in the courtroom speak highly of the results Butler and company achieve for them. Consider what one client posted on Butler’s LinkedIn page: “I have worked with Jim on many occasions over the past 20 years, both as a client and when Jim represented people on the other side of the table….He knows how to get a deal done and use his expertise towards that goal, not have his expertise get in the way of getting the client’s goals achieved. I’d highly recommend Jim and JMBM for any type of hospitality work.”

Recently, Of Counsel talked with Butler about his career path, hospitality law experience, what he likes about the practice area, and other topics. The following is that edited interview.

 

Choosing Lawyering Over Engineering

Of Counsel: Jim, what influenced your decision to become a lawyer?

Jim Butler: I was very successful in high school, particularly in speech, debate, and various oratory presentations. I did original oratory, dramatic interpretation, humorous interpretation, two-man Lincoln/Douglas [performances], and so on. I went to nationals and placed well; I was in the finals for three or four years. And, I was also very successful in science fairs and went to the state and national levels, winning the grand prize from 8th grade through my senior year in physical and biological sciences.

I grew up during the Cold War with the bomb shelters and “the USSR is going to wipe us out.” We were in the era of German engineering leading the world—Wernher von Braun and rockets. So, I wanted to be either a nuclear scientist like Edward Teller or a nuclear physicist, and I also wanted to be Perry Mason, who was a hero of mine.

I was admitted to engineering school at U.C. Berkeley because my original plan was to get an engineering degree or something in physics or science and then add a law degree. That was my dad’s idea, and maybe I put them both together. I had to take a drafting course in the summer. I never took any “Mickeys” [Mickey Mouse classes]—that’s what the surfers took in high school, the easy courses. I was into science and math, that track. But you had to take drafting to get into Berkeley engineering school.

So, I was there during summer school taking drafting and I received my block schedule for my first year. It had [engineering classes], and I said, “Where is the history and the philosophy and the language and all the other stuff?” They said, “In engineering school we don’t do that. You get one elective. We recommend Sociology 18 because that gives you a broad brush.” I literally changed from the engineering school to letters and science that day and decided I’d start out on the Perry Mason track instead of the nuclear physicist track.

 

OC: What drew you to the hospitality practice area?

JB: That’s a great question, and it’s one of those sudden left turns that I never expected. I had practiced in a number of areas in my first few years as a lawyer. I loved the technical things; to me it’s like a puzzle and it’s fun. I started as a tax lawyer for a couple of years with one of the top tax firms in the country. Then I got an opportunity to go with a super-hotshot firm that was a spin-off from big firms: O’Melveny and Gibson Dunn and Latham. It was the chance of a lifetime. And the tax was relevant. At that time, everything that was sold was a tax shelter, a [Section] 241 tax shelter. But this was a securities firm. So, I ended up using my tax knowledge, but really becoming a securities lawyer.

In the next four or five years I probably handled a hundred offerings and a thousand private placements. They threw me at it as a young lawyer three years out of law school. I went up against partners at the top firms in the country. It was like being pushed into the deep end of the swimming pool.

So, I had come from that background, and then I went with the second-largest firm in the United States at the time, Finley Kumble, and became head of their corporate department. The firm had quite a banking practice. All the banks needed holding companies, and holding company regulatory work is this very complicated area, so you can already see my name written all over that. I became kind of the holding company/bank/securities expert and started dealing with it. The bank holding companies are really where the power is in international banking. The banks are regulatory animals, but the more interesting corporate businesses are the holding companies.

 

Real Estate Roots

OC: When did you join Jeffer Mangels Butler & Mitchell?

JB: I became a founding member of Jeffer Mangels Butler & Mitchell in ‘82. In the late ’80s, we had the banking crisis—the RTC [Resolution Trust Corporation], all that. With our position in banking, we were automatically approved by the FDIC to represent them on director and officer claims on failed banks. So, they went after directors and officers who loaned to themselves or their families or exceeded loan-to-one borrower ratios and [situations] like that.

It wasn’t very active before the RTC days, but we were pre-approved when those hundreds of billions of dollars of real estate went through the failed banks and failed savings & loans starting in the late ’80s/early ’90s. We were one of the very few firms in the country that were approved to do that work, because they had to do a proctological examination on the law firms. [ laughter] The FBI was involved and so on. It was a big deal.

We became one of the top 25 law firms in the U.S. handling real estate. And it turned out, because of a fluke, I got into hotels with that. There were huge, huge hotel holdings that the Japanese had in Hawaii, California, New York, and the Caribbean. We secured a $100 million loan on a resort. Some loans were $300 million. It was a lot of money back then, even though it might not seem like quite so much today. But those were very complex loans, and complex always means, “Jim’s going to have fun with this.”

I got into that and just loved hotels more than anything else. It’s not the hotels themselves. I liked the complex, puzzle-solving element, and I especially loved the people. It’s like being in entertainment. We have rock stars; we have brands; it’s like a little community of 200 people who are all the lawyers and the bankers and the accountants and the brands that make up the whole industry. It’s a club. We get together several times a year.

So, I basically took a left-hand turn in 1987 and went from being a business/tax/securities lawyer to being a hotel lawyer.

 

OC: In addition to the people and complexity of this work, what else do you enjoy about the hospitality practice area?

JB: I think my background over my career suits me uniquely to serve as the orchestra leader, if you will. I don’t pretend to be current, but I have substantively known and understood tax, securities, banking, real estate, workout, and bankruptcy, because those are the things we’ve done in massive quantities at a very high level. And the hospitality arena requires all of these different areas, because hotels are not real estate. Hotels are special-purpose or maybe solo-purpose real estate and integrally intertwined operating businesses. This isn’t passive rent with 10- or 20-year leases with tenants you replace once in a while. It has so many moving parts. It has labor and employment issues, contracts, and vendors and management agreements.

It is the perfect orchestra for an orchestra leader to bring it all together. And I know how to play the trombone and the violin and the piano. Not that that is my strongest area, but I can help our team members bring it together and I know how and when to do it. It’s so much fun to be able to do that to help clients accomplish their goals and get a smile on their faces. I love it.

 

OC: I love the metaphor. … I want to flip it around now. What about the practice area that you work in, as a maestro of the orchestra, do you find challenging, that you don’t particularly like?

JB: I will tell you some minor quibbles, but the real answer is: There’s nothing—nothing significant. People sometimes ask me if I’m going to retire. I have a fair amount of white hair. The best analogy I can make is I feel like an eight–year-old kid who is getting close to bedtime and who is playing or watching TV or whatever, and the mom or dad says, “Hey, it’s time to go to bed.” And I think, Oh man, I don’t want to go to bed. Can’t I just finish this game or this movie? Or whatever it is. That’s the way I feel. I love what I do. I get up at six a.m. and get my cup of coffee and go to my computer and I’m excited. Why would you want to stop doing that? People pay me. I have fun. I work with good people.

I don’t love some of the administrative stuff, like keeping time and billing, but that’s one of those evils that lawyers have to put up with. Those are annoyances that are just so minor compared to the overall experience. They say if you love what you do you’ll never work another day in your life. And that has been what I’m blessed with.

 

Positive Culture Breeds Success

OC: You play an instrumental role in the firm at large. When you think about the near future of Jeffer Mangels, where is the firm headed?

JB: Having been at several of what I view as best-of-class law firms in the country before coming here, in terms of small firms and big firms, for me, this is a place where I think I’ve died and gone to heaven—with collaborative people who are open, who help build a practice, who share. It’s not close to the vest; people don’t do things behind your back. And lawyers are very smart people, but often they tend to be in a competitive environment of a law firm where they can’t drop the competition. They’re afraid if their partners know of a possible lead, because maybe they’ll steal it, and they won’t get origination, or something.

But we have a culture that is just the opposite of that. Everybody talks and dreams of it, but I don’t know anybody who has it like we do. I wasn’t here on opening day, November 1, 1981, but I attribute [our culture] to the ethic and the approach that Bruce Jeffer and Bob Mangels and the first guys who formed the firm had that you almost can’t create unless you have that fabric and approach beforehand. Number one, we’re focused on taking care of the client. Number two, we’re focused on working with good people.

I’d come from a firm where we had some great lawyers with tremendous international reputations who were just very difficult lawyers–screamers, yellers, etc. I had a partner who threw an electric typewriter at a secretary in the Triangle Towers and almost broke a window 22 stories up in the air. The guy was usually very nice, but he had a temper, and he was nuts. Brilliant and nuts. And many successful lawyers are tolerated because, “What are we going to do about Joe? He’s got $10 million dollars of business.”

When I interviewed, Bruce Jeffer said to me, “Tell me about your temperament.” I’m very even and I had no problem. The most important thing here is to get the right people. With the right people, everything works. With the wrong people, nothing will work. We don’t tolerate yellers and screamers. First of all, we will have discussions like this, to tell people at the front end what to expect. And they need to tell us that they will comport themselves in a proper way. We also do that in terms of other things: getting your bills out on time, getting your time in. You don’t get paid until you get that. You know what? Everybody seems to get their time in so they can get paid. Just amazing how that works. That makes the firm work. And once you have that culture, it’s easier to keep it.

We are always looking for the right people. We recognize areas of growth, continually, but we won’t step into it just to get into it. We’ve got to have the right person. We grow organically; we grow relatively slowly; we have certain areas of opportunity. In hospitality, we’re really looking for people right now. We’ve got tremendous opportunities for the right person in many, many areas. But it is the right people and the right culture. It will continue to be fun and profitable, and that’s really what we’re looking for.

We’re approached all the time to be acquired by some big firm. We’re more profitable than any firm that has come to us because of what we do and how we do it. We haven’t seen anything that looks remotely interesting to consider. We like who we are.