Ep: 24 Rick Chung on Private Equity and the Office of General Counsel

Rick Chung Discusses SVP & General Counsel of Bowlmor AMF | The Office of General Counsel as a Growth Strategy | Landing Private Equity Clients | Advice for Private Equity Firms | Coding | Mentor Wisdom

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Here are some highlights of my interview with Rick Chung:

Every day I try to perfect the approach where people come to me address their concerns. 

I try to grow every day and learn more about my company. If you’re not fluid and you’re not dynamic, you’re stagnant and that’s not good. 

The key for private equity growth & success is to identify what the need is from a human capital perspective in executive management.

My GC role was to win the hearts and minds of the people that I work with. How did I get them to trust that the office of the general counsel was not going to be the impediment to their growth and success, but was going to be the accelerator?  

I think a lot of offices of general counsels look at the OGC in terms of a risk mitigation. Or you can look at it in terms of an opportunity, an opportunity for growth. 

I’ve never considered our outside counsel as an outside player within our organization. I want them to learn more. I want to see a reciprocal relationship. The more they understand about our business, the more they’re going to be better counsel. 

Not everyone knows how a bowling alley operates. It’s a very unique environment. The more I see our outside counsel wanting to learn, the more they’re going to be able to function. 

My mom once said “Enjoy the journey.” What I took from that was for every one of these events, every one of these conflicts that we resolve, concerns that we address, is a journey. The journey is the goal. It provides the tapestry of experiences that really make us a better a legal professional.

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Links referred to in this episode:

Rick Chung LinkedIn Profile 

Cerberus Capital Management by Wikipedia

Bowlmor AMF by Wikiepdia

Proskauer Rose LLP

Consigliere by Wikipedia

The New York Times

People Magazine

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Audio Transcription 

To Download the PDF Transcript, click here. (Look in the top right corner and click on the three dots to download.)
Hi listeners, this is Chris Batz, your host of the Law Firm Leadership podcast. Today I interviewed the New York general counsel of the world’s largest entertainment and bowling facilities. We discussed the fateful phone call from a well-known private equity firm looking for a special breed of in-house attorney to take this company emerging out of bankruptcy into a thriving state. There will be a lot of takeaways, especially insights into the private equity world.
Just remember the PDF transcript of this audio is available to download. Go to LionGroupRecruiting.com/podcast.
As many of you know, we interview corporate defense, law firm leaders, partners, general counsels, and legal consultants. You’re listening to episode twenty-four of the Law Firm Leadership podcast.
Chris: Welcome to the Law Firm Leadership podcast. I’m your host, Chris Batz, with the Lion Group. Today I have the pleasure of speaking with Rick Chung, general counsel SVP of Bowlmor AMF, the world’s largest operator of bowling and entertainment facilities with over 320 locations and a workforce of 9,000 employees. That includes the US, Canada, and Mexico.
Rick is a specialist in corporate growth strategy, especially around mergers and acquisitions in geographical vertical growth. He is also well-versed in legal infrastructure, technology, compliance and operations, procurement, HR, privacy and security management. Prior to Bowlmor, Rick was GC and compliance officer secretary at Medivo and served as corporate counsel at Epiq Systems. He began his legal career at Proskauer Rose and received his law degree from NYU School of Law.
Welcome Rick to the Law Firm Leadership podcast. It’s great to have you on the show.
Rick: Thank you Chris. Thank you for having me.

“I’m not really a bowling attorney.”

Chris: Rick, there’s just some incredible history you have with assisting corporations. Tell us a little bit about the phone call you got from the investor group, who they were, and what were they asking you to do.
Rick: Very shortly, I received a call from Cerberus, who I’d worked with before. It was a private equity company. They gave me a call and they said, “Rick, we have this great iconic brand. It fell on tough times coming out of bankruptcy. We want you to really be a fresh voice, a new face that allows the company to grow.”
I had worked with Cerberus in the past and assisted Ben in terms of developing certain other growth strategies with other portfolio companies. I asked him, “What is this company?” They said “It’s Bowlmor AMF”. The first response that came out of my mouth was “I’m not really a bowling attorney.” They said, “That’s not what we’re looking for. We’re looking for your outlook. We’re looking for your processes. We’re looking for your strategies. We want to look for someone who can steer this ship in a different direction that we think can maximize the overall potential.”

Creating an Infrastructure for Growth

Chris: With basically the turnaround or the bringing out of bankruptcy and making them profitable, I’d love for you to share with my audience, Rick, what have you learned from taking this company from bankruptcy to being thriving right now?
Rick: I think that there is a common thread throughout my legal career in that back in ’97 to 2007, it was growth during the dot com and technology boom. It was taking these companies from the infant stages and developing the strategies and policies and business models and business plans that allowed them to roadmap to grow and holding their hands during the entire process.
My outside counsel-type role as deputy corporate counsel and general counsel, prior to me coming on board here, there also was that same common thread, which was these were companies that really did not have the infrastructure in terms of foundational principles in order to grow. It was to look in terms of that toolbox that I think all lawyers have and figuring out what is needed here. It’s not a one-size-fits-all type of solution.
When I came on board here, and I think it’s important for any attorney when they come on board at a company is to look at it from a fresh set of eyes and not pigeonhole the company in thinking that a certain or specific solution has got to work in this particular case. I think that kind of an open mind type of concept in a collaborative model works ideally in this particular environment and it also worked really well in my prior roles as well.

Assessment and Collaboration

Chris: When you had these roles and when you talked about strategy, you were speaking almost as a CEO. Help me understand your involvement with corporate strategy with the CEO, with the C-suite.
Rick: I think the first thing that I typically do when I’m in a company or portfolio company as the head of legal and the office of general counsel, is to speak to as many folks as possible in terms of understanding what are their needs.
Really it ends up being a listening exercise for let’s say the first year, first year and a half. During that initial few months, few weeks, few years, I think that my role has been to listen very acutely in terms of understanding what their specific needs are and then offering suggestions in terms of “Well, have you thought about this? Is this also a need?” before you try to pick up the toolbox and figuring out what the solution can be.
Typically that has been the first strategy. It is meeting, certainly, with the executive management team, each one of them in terms of their fields of expertise, but it also ends up meeting with the middle tier management as well, which I think is equally as important.

He cut his teeth on the DotCom boom and bust within Biglaw

Chris: I’m assuming this is the first time you’ve taken a company from bankruptcy to a thriving place, is that correct?
Rick: Outside of the law firm. Inside of the law firm during the dot com boom, when the bubble burst around 2000/2001, there were a lot of work outs, there were a lot of restructurings, both formal and informal, where we had to either pivot a business model or liquidate some assets or full-fledged restructuring.
Within that law firm environment is where I really cut my teeth in terms of collaborating with the business unit leaders and the president and the CFO, in terms of understanding what is their horizon approach in the near term, the one-year plan, the three-year plan, the five-year plan in order to really pick up this company by the bootstraps and launch it forward in a different direction that’s much more prosperous.
Certainly coming out of the law firm Bowlmor AMF was my first company where I could reach back during my days at Proskauer and bring forward all these new strategies and new tools and implement them in this particular type of bowling and leisure hospitality environment.

The Office of General Counsel: Growth Impediment or Strategy

Chris: Absolutely. What were some of the problems you were solving in those first initial years you were working there?
Rick: I would say that for this particular company, the bankruptcy was not driven by debt or liabilities. My view was that the company needed an acceleration of innovation, of taking chances, of capitalizing and executing on opportunities, and understanding that in order to achieve success, there shouldn’t be a fear of growth.
I think a lot of offices of general counsels look at the OGC in terms of a risk adverse type of mentality, risk or risk mitigation. You identify the risk. What are you going to do about that risk? Are you going to put a box around it, which is are you going to insure against it? Or are you going to mitigate it? Or you can look at it in terms of an opportunity for growth because if your competitors have that same risk, how you address that risk from an office of general counsel perspective, creates that opportunity where you can really help propel the company going forward in terms of growth strategy.
When I came onboard here, it was identifying what those opportunities were and capitalizing on it. That’s probably the more tangible aspect, but there is an intangible aspect as well. The intangible aspect is that every company, and we have 9,000 employees, operates on that personal appeal in addition to the tangible appeal.
What I mean by that is that the company is made up of individual’s and it’s made up of people. My role, when I came on board, was, in essence, to win the hearts and minds of the people that I work with. How did I get them to trust that the office of the general counsel and the head of legal, in my role, was not going to be the impediment to their growth and success, but was going to be the accelerator? How do you change a person’s mindset in terms of accomplishing their growth strategy being aligned with ours? That’s tricky. It’s an interesting skill to have, but it’s also very exciting.
Chris: Well, it sounds like a paradigm shift because the traditional perception of the legal department. How did you become a catalyst or a department to help forward everyone else’s goals?
Rick: The first step is listening. The first few weeks, first few months are just a listening exercise. Then I will say that it needs to be entirely collaborative. What I mean by that is when I was at the law firm, closing a deal, the attorney, whether you’re an associate, mid-level associate, or the partner, the law firm was always seen as a quarterback for the deal, to make sure that all different aspects of the transaction was taken care of.

Advice for Attorneys working with Private Equity Firms

Chris: Understood. As a recruiter, and I don’t talk about what I do a whole lot on my podcast, but I think it is important to know that I’m approached by attorneys, partners in big law firms and many, many general counsel throughout the ranks in the United States. They’ll ask me how can we come in line with serving private equity groups because there’s so much dry powder right now. What advice would you give similar attorneys who want to assist investor groups with their objectives?
Rick: I think that the first thing is to understand that a private equity group is really a partner to a company in terms of their growth horizon. You have to keep that communication line open with the managing director over at the private equity group and try to understand alternately what is their horizon. Then hopefully you create the milestones and business plan to achieve their ultimate goal and ultimate horizon.
What I would also say is that those milestones need to be measurable. In a marketing sense, there should be lift. How you measure that lift can be both quantitative and it can also be qualitative.
But the end of the day if you provide full visibility to the private equity company, that’s what they’re looking for. If they see those measures of success being accomplished along the way within the time parameters that you say that will be accomplished, that really engenders a high level of trust in the beginning, where private equity folks, will provide much more leniency and much more leeway to be able to execute on your business plan.

How-to Advice for Law Firms landing Private Equity Clients

Chris: Rick, thank you. Another question I just want to ask is sort of tangent to it, but these general counsel and law partners ask how do they get their foot in the door with private equity firms. What advice would you give someone who’s highly skilled, but to pitch themselves, if you may, to a private equity firm? How would they go about doing that or how would you suggest them trying to see if they can be a value add to the PE team?
Rick: Sure. I think that there are two aspects, well probably three in terms of representing private equity folks. The first aspect is compliance in terms of managing their multitude of funds. Usually it’s limited partnership or LP units that gets issued. The second aspect is raising capital. If you’re a law firm, how do you assist the private equity company in terms of raising the capital and in terms of putting together the fund that’s soliciting the offers for the LP units? Then the last aspect is really representing the portfolio companies of the PE firms in terms of being a value added resource.
I think that in a law firm you can pivot yourself in terms of maybe one or two or all three, but ultimately I believe that law firms can try to find their sweet spot in one or two or three of those. It might be just one and that’s perfectly fine.
The last bucket that I mentioned in terms of providing that value added resource to the portfolio companies really ends up being working hand in hand with the in-house group of the portfolio companies to ensure that the voice and the communication between the portfolio companies and the PE firms is well served. That line of communication and many times the outside counsel can be a very nice conduit in terms of facilitating that.
A great example to this is to suggest strategic growth. The perfect example is that when the law firm probably has multitude of clients that are at various stages of growth or stagnation that may or may not be looking for a partner to merge and have a joint venture with. Combining that opportunity with a portfolio company, ultimately helps the private equity company because the accretive growth that the private equity company can accomplish through strategic acquisitions ultimately increases the overall value of the combined consolidated enterprise, which, of course increases the ROI potential at the end stage of the exit.

Hiring Legal Talent Advice for Private Equity Firms

Chris: That makes a lot of sense. Let’s invert this little bit, this question. What advice would you give investor groups or private equity groups looking to hire legal talent in this economy?
Rick: There are two ways of looking at legal talent, which is do you look for someone who fits the field of expertise of that portfolio company. What I mean by that is if the portfolio company manufactures auto parts, do you look for a general counsel who has that auto parts or manufacturing experience?
The other way to look at it is to look at it in terms of identifying the specific skills of the general counsel or the attorney that can be transferred very easily. That’s certainly what Cerberus looked at with me. What they were looking for was certain skills that transfer readily regardless of industry. I truly do believe that a private equity company is best served when they’re looking for legal talent and looking at the skills, the experience that they feel can be easily transferred regardless of industry to their portfolio companies that they wish to staff. 

Advice for Private Equity Executive Management

Chris: Excellent. In essence, because you’ve seen so much in private equity, what advice would you give folks in private equity? You talked about a true exit. You talked about kind of leadership structuring. Can you elaborate on that?
Rick: I think that you hit the nail on the head, which is leadership and structure. From a managing director at a private equity firm that’s looking or has just purchased a portfolio company or made a significant investment in a portfolio company, the ultimate question is What’s next? I think that managing director has either made the evaluation that the existing executive management group, the human intellectual capital either can pivot and be a true value added and instrumental in the growth of the portfolio company or that managing director feels that we need more.
The key I believe for private equity growth is to first identify what the need is from a human capital perspective in executive management and then figuring out either we think it works or we think it doesn’t work. The quicker that the managing director within a private equity group figures out from a human capital perspective, whether it works or it doesn’t work and then if it doesn’t work, then pivots very quickly, I think that that’s going to be a key component in terms of success.

Think The Godfather

Chris: Let’s talk about the purpose of the office of general counsel and specifically your leadership style. What are your companies seeing and why is this so important to you?
Rick: I think that OGCs in various companies and certainly my prior two roles in the office of general counsel, served different purposes. In my current role as office of general counsel, it was truly to be what I like to call a consigliere, not a lawyer. What I mean by that is that everyone looks at lawyers as perhaps a stumbling block. The goal when I came on board here and also my prior two roles as well, was to tear down those walls and how do I create truly a consigliere, a true counselor type of approach or perspective in the eyes of my personnel. It can be very small.
The example that I tell a lot of folks is we have 9,000 employees in our company. The phone number to reach me, which all 9,000 employees have, is my cell phone number. As a consigliere, I’d rather know than not know because that can help people when they tell me what their issues are. It’s very difficult for me to guess on an hourly basis what’s wrong or what I can try to help ameliorate or address.
I think that that is really one of the key components of my approach in terms of running the office of general counsel and being the head of legal here is how can I try to perfect the role of the consigliere every day. I don’t espouse to having the perfect solution, but I always try.

How a Corporate Legal Department Bring Value to a Company

Chris: Rick, you told me that you’re not one to keep status quo, that you like to move companies forward. You mentioned that if you’re not making a company money, they should fire you and that you guys are a value add and not a call center. Speak to those things.
Rick: I think that to look at your role within the company as not fluid, as not dynamic, well if you’re not fluid and you’re not dynamic, you’re stagnant and that’s not good. I try to grow every day and learn more and more about my company. In the process, it means understanding where I can provide input advice as a counselor and lend my weight and my 21 years of experience in figuring out okay, I’m going to reach into my toolbox, address this particular need in this particular department and allow that department to grow.
A perfect example is marketing. The marketing aspect really in the last 20 – 21 years has taken a very transformative type of role. Now the usage of big data, the usage of understanding that everything has to have a measurable ROI or a metric where I can gauge the success of that marketing is important.
How does legal play in that role? Well, when drafting a particular agreement with a marketing player, I want to put in the key performing indicators into the agreement in order to measure up the performance of that marketing player with what my expectations are for ROI or lift. I want to be able to hold you accountable, marketing partner, to those measuring specifics because if it’s in your marketing literature that you can draw that level of performance, I’m going to hold you accountable to it.
I think a lot of times what I’ve seen is that legal departments look at an agreement not in terms of a value add on how I can improve performance, but in terms of how can I measure out mitigating the risk or the downside risk that the marketing sponsor doesn’t mess up. You flip that paradigm around and you ensure that there is a measurable success where I can say, “You know what? You guys are doing a great job. Let’s realign our interests.”
How do I realign those interests? Well, if my revenue hits a certain amount because of your marketing efforts, I’m going to give you a bounty of X, where that now our interests are aligned.

Implementing Accountability & Continuity of Knowledge with Outside Counsel

Chris: That’s a great example Rick. If you wouldn’t mind, I want to jump to your perspective on outside counsel. You’ve been on the other side of the deal where you’re serving corporations/companies. Then you’re on the inside, where you’re deciding who to use and how to use them. When you came to Bowlmor AMF, I believe you had as many as 40 or 50 outside counsel that you were working with. I know that you consolidated. Can you just explain to my listeners your perspectives and expectations of outside counsel?
Rick: First I think that the team includes outside counsel. I’ve never considered our outside counsel as an outside player within our organization. In fact, they’re in inside player with an organization. I want them to learn more. The more I can see that there’s a reciprocal relationship where, sure, I’m providing their business in terms of representation that they can offer up, but at the same time they’re hungry for more in terms of understanding more aspects of our business. The more they understand about our business, the more they’re going to be a better counsel.
The perfect example of this is we all know what a bowling alley is, but not everyone knows how a bowling alley operates. It’s a very unique environment. There’s a lot of nomenclature that we use. We have certainly, there is the typical bartender, there’s a typical server. We have a food and beverage supervisor. We have, which is very specific to our industry, that person who sprays the shoes, a shoe clerk. There is a lot of verbiage and semantics that is very specific to our industry. The more I see our outside counsel wanting to learn about that same type of manner of speak, the more they’re going to be able to function in the court room or in drafting an agreement in a much better scale.
You’re absolutely right Chris, when I came onboard it was 40 or 50 counsels. What I found is that and what I wanted to create was a great degree of accountability. I should be rewarding individuals or law firms with more business who do better. That greater level of accountability is first and foremost an incentive in terms of their performance, but it also allows for a greater level of continuity of knowledge, where it’s centralized. The more they know, the better they’re going to perform.
The other aspect of this – I’ll give you a funny anecdote. I decided I want to meet with as many of those 40 or 50 law firms as possible when my first probably six months here. As I was having lunch with one of the law firm partners, he asked me what was important to me in terms of selection of outside counsel. I said, “Well, a lot of the things which I discussed previously just now, but also I said if I was going to boil it down to something, I need to feel that my outside counsel is a value add.” How can that outside counsel, players within that law firm truly be a value add in terms of understanding my business and accelerating the growth of my business.
That attorney said to me, “Well, I definitely think I’m a value add. I’ll tell you why, Rick, because I really like bowling.” I thought, so you believe that you’re a value add because you actually like bowling and that’s the reason why. Needless to say, that law firm is not one of our law firms that are currently providing legal counsel to us. It really has to do with more than that. It doesn’t have to do with liking our business. It has to do with how you can help our business. That is just truly an important function that I think that outside counsels should never lose sight of.

Being a Legal Executive with a Coding Background

Chris: I appreciate you sharing that. Let’s pivot a little bit into some more personal subjects. You got a degree of economics in your undergrad and you studied coding. Tell me about how this is maybe applied to your business life and as an attorney. Do you look at things differently because of this?
Rick: Yeah, I think I do. Coding is very process oriented. It’s a very linear thought pattern, whereas if you code a strand, it ultimately marries with another strand of code and all has to work together in order to create a feature or function that’s executable. I looked at the law in the same fashion which is the more processes that I can create in terms of transparency to my paralegal, my associate counsel, my deputy general counsel, the more they’re going to be able to function in a very predictable way, where they have confidence that if they follow that process, they’re going to achieve some level of success.
Economics really has to do I think with what I call a level of empirical substantive way of looking at the law. What I mean by that is that economics certainly is formula driven and numbers driven, but it also is expositive because in other words if you cross two lines in terms of supply and demand, there is an equilibrium where you know where the price and the amount of goods bought and sold will be. There is your process. There is the empirical testing. There is the actual result, where it is palatable in a theoretical perspective.
What I’ve tried to do is approach it in very much the similar way, which is how can I provide the most palatable way in terms of demonstrating of proof where it is accepted, whether by my stakeholders or the court or the person that I’m negotiating against.

What is on Rick’s Book Shelf?

Chris: What are you currently reading today or what do you read on a daily basis that you enjoy?
Rick: I’m a news junkie. When people still read newspapers, I read a lot of newspapers in my daily life. Now I read more online as much as possible. I think that understanding where the temperature and trends are in the world or on a national scale or even on a local scale, is important in terms of where, from a professional perspective, the office of general counsel needs to fit in, and from a much more organizational perspective, where the company needs to fit in.
Chris: What papers would you consider your favorite or you kind of go to?
Rick: I read a lot of the New York Times. Believe it or not, I even try to read People magazine. The reason why is this, a lot of our play is leisure and a lot of our play is families and Millennials. The more that I can understand what the trends are, the more important it is going to be for me to better position the company.
A great example is this. We have grand openings at a lot of our bowling centers. The draw during that grand opening is very important. We invite media. We have VIPs come. There is that customary photo op opportunity in front of our backdrop. All of that is important to us. Sometimes we have celebrities. We also of course, as part of a family entertainment facility, we have music.
A few years ago, we would try to retain a guest DJ, which is very important. Had I not read up about electronic dance music or the latest DJs that are out there, I wouldn’t have really truly understood the importance of having a one and a half or two hour trial run with a DJ so that we understand what their playlist would be that fit our environment.
Chris: You had mentioned to me that you’re a family man. Tell me a little bit about how you guys do spend your leisure time when you have spare time.
Rick: I’m very fortunate that I have a wonderful, supporting wife and a five and a half-year-old son, who’s going into kindergarten. My son gets to get a kick out of telling his friends that his dad works inside a bowling alley. I tell him well, dad polishes the balls, resets the pins, makes sure that the French fries are crispy, so that’s what he tells his friends.
I am very fortunate where I have a very supportive wife that understands that I do travel because we have 320 centers that I have to travel to because of you name it. I had to go up in Chicopee, Massachusetts one year because literally because the toilet flooded. It caused all these issues. She was supportive enough to buy me these galoshes to ensure that I was well protected.

Sage Wisdom from a Mentor

Chris: That’s excellent. What is something you have learned this year that has impacted you and how you live personally or professionally, anything from a book or something that’s come up?
Rick: As we grow up, I think that we have several mentors in our life. Along the way our mentors say different words of advice. My mentor and my person that has provided me the best Yoda, if you want to call it, type of legal advice is actually my mother. She’s 78 years old.
“Enjoy the journey,” she said when I was at first or second year associate at Proskauer, just working at one point 41 days in a row. I said, “Mom, I don’t know if I can do this.” This is 20 years ago. She said to me, “Rick, enjoy the journey.” I didn’t know what that meant until now, where it’s really resurfaced and really resonated.
I know now we get bombarded on a daily basis with all these challenges, with all these experiences, and all these events. As a legal professional, we were trying to manage all these aspects. If we just take a step back and take it from a very holistic perspective, I think we all understand that every one of these events, every one of these experiences, every one of these conflicts that we resolve, concerns that we address, is a journey. In and of itself it is the goal that provide that tapestry of experiences that really make us a better legal professional.
Chris: It’s interesting because it’s so hard for people at certain points in our journey of our life to not understand what it means, but in hindsight you really do see the value of it. Thank you, Rick. It’s been an honor and pleasure to have you on the show.
Rick: Great, thank you very much for your time. It was really worthwhile and I hope to do it again.
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