Law Times

Law Times • November 24, 2014 Page 11 www.lawtimesnews.com Cognition predicts continued growth Firm aims to fill niche with experienced counsel at low prices By Julius melniTzer For Law Times ore than 40 law- yers with about 400 years of in-house experience — that's Cognition LLP's claim to fame. The firm, founded about 10 years ago on the principle that re- taining a traditional law firm or hiring full-time in-house coun- sel is "too expensive for most startups and smaller compa- nies" and "too inefficient for big companies facing budget cuts or staffing freezes," features former in-house counsel, most with ex- perience at major law firms, who can augment the operational, commercial, transactional, and intellectual property needs of in- house legal departments. "We provide something that fits between full-time in-house counsel and traditional out- side firm services," says Cogni- tion co-founder Joe Milstone. "Our goal is to provide in-house counsel work better, faster, and cheaper than any other outside provider could do it." Cognition does so at a lower cost than many big law firms, a model made possible by main- taining rigid control over the firm's expenses. Cognition claims its fees are a half to a third of those charged by the coun- try's major firms. "We keep our overhead very low," says John Rider, who bears the unique title of chief innova- tor at Cognition. "There are no fancy offices because our law- yers are dispersed from their home sites to work with the cli- ents at their place of business." There are other factors as well. "We don't have 200 years of history or dead-weight part- ners," says Milstone. "Our mantra is that we'll spend money only on adding value to clients in terms of lower costs, better service or better people. We don't spend on real estate and we use cloud technol- ogy to the maximum. And that's a great leveller." Over time, the firm divides its market into small- and medi- um-sized companies that don't have general counsel where Cognition lawyers are what Milstone calls fractional gen- eral counsel; and larger com- panies where it supplements the work done by in-house counsel and also provides certain services previously outsourced to traditional ex- ternal lawyers. "Originally, 70 per cent of our work was from [small- and medium-sized enterpris- es] and 30 per cent from larg- er companies," says Milstone. "Of late, the reverse has been true." For the most part, Cogni- tion's lawyers provide general corporate commercial and litigation advice. Cognition also has an arrangement with McCarthy Tétrault LLP and other firms that provide spe- cialized expertise when need- ed. But it's a two-way street. "If these firms need work done at more competitive rates that enable them to get a trans- action or a piece of litigation, then they come to us," says Rider. "We're always looking for new opportunities to do things in a more innovative way, and this type of co-operation exem- plifies that effort." Rider insists Cognition isn't trying to compete with the big law firms. "We run the firm on an en- tirely different corporate mod- el," he says. "For example, our lawyers don't have to worry about at- tracting clients because we have a dedicated sales team to do that." Nor is Cognition able to pro- vide an army of lawyers for ma- jor, multibillion-dollar transac- tions or massive pieces of multi- jurisdictional litigation. "What we can do in those cases is play the role of in-house counsel by running the file," says Milstone. "We can also internalize some of the work and be part of the in-house team." Unlike major law firms, Cog- nition uses associates in a lim- ited fashion. "We have added three or four juniors at the head office," he says. "We use them when extra help is required for clients who want a price point that is even lower than what we generally offer, for work that basically re- quires only law school training." Jill Schatz, general counsel at Primus Telecommunications Canada Inc., is one of Cogni- tion's clients. "The value Cognition adds is that most of their peo- ple have inside knowledge of what it means to be in-house counsel and a better under- standing as to what consti- tutes value for in-house de- partments," she says. "They bring a different mentality that keeps the focus on busi- ness as opposed to just look- ing at the legal issues." Alena Thouin, general counsel at Alterna Savings and Credit Union Ltd. and Alterna Bank, sees many ad- vantages in using Cognition's services as opposed to hiring a traditional external firm. "The lawyers are the same lawyers you find on Bay Street, they come at a much lower price, they're very f lexible in terms of fee arrangements, they provide quality advice, and they're always looking for ways to innovate," she says. "And last but certainly not least, their in-house counsel experience makes a real difference. They know what kind of response I'm looking for because they know I have to take it to an executive who just wants a memo with three bullet points instead of 40 pages, which I can also get if I need it." Thouin does say, however, that Cognition is "not the right answer" for "very specialized" work. "Sometimes they just don't have the expertise, but it may be just a matter of time where if they have the right clients, they would hire the right people," she says. For his part, Milstone be- lieves the firm will hire more specialists as business grows. And business is growing. The firm now has lawyers in Toron- to, Ottawa, and Calgary. 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