The law of simplicity
Cognition may be the shape of legal firms to come
Somehow having an office in an old warehouse at the heart of Toronto’s entertainment district — replete with 15-foot ceilings and exposed floor joists — feels exactly right; the air hockey table in the office reception area helps as well.
Unwary visitors would immediately think that they had walked into the offices of a tech startup, rather than those of law firm, Cognition LLP. In some ways, I shouldn’t have been surprised. I was stunned at how closely Cognition’s offices resembled those of the futuristic — yet fictional — law firm I described in my recently published book on legal innovation.
Rubsun Ho, formerly a lawyer with Stikeman Elliott LLP and now co-founder of Cognition, greets me dressed almost as casually as I am — and I’m in walking shorts. He laments that the firm will have to move in 12 to 18 months because the building will soon become yet another casualty of the city’s booming condo market. Wherever the firm moves, he wants to retain the same feel — and find someplace that charges the same rent.
Cognition’s office is fairly empty during my visit. Most lawyers work from home or at client offices using cloud-based computer networks. Cognition’s use of out-sourced support staff further reduces the office body count. Ho says that having inhouse support staff may be on the horizon though, with the intention that Cognition could also second them out to busy in-house legal teams.
Glaringly obvious is that Cognition’s space is devoid of private of- fices; instead, there is ample desk space throughout its open-concept design. The firm’s 30 lawyers don’t seem to mind, even though they come from big law or general counsel roles. Clearly the notion that lawyers require private offices and the trappings of prestige in order to work effectively has been proven false. And, if anyone is not convinced that this new model of legal services is here to stay, Ho trots out his firm’s recent Profit 200 Award given out by Profit Magazine to the 200 fastest growing Canadian companies by five-year revenue growth; Cognition ranked 155th based on revenues of about $4.4 million in 2011, up from $1.1 million in 2005.
Cognition as a legal-services provider is hard to pin down. It follows no preset notion of what a law firm should look like, operate like or act like. Client work falls into three distinct categories: secondment work for in-house counsel looking for project or temporary lawyers (à la Axiom and BLP’s Lawyers on Demand); quasi in-house work for startups and early-stage companies; and as a subcontractor to big firms who retain the high level bespoke work, but subcontract out the more routine part of their files to Cognition in order to save client costs.
Ho is quick to point out that Cognition is not here to eat big law’s lunch. In fact, there is a friendly coexistence between the firm and its bigger competitors; when Cognition lawyers are in-house they still retain big-law counsel for specific matters.
Cognition is loosely based on a corporate model of management, even though it’s a partnership; there are only two partners, Ho and Joe Milstone (and not likely to be any more). All Cognition lawyers have employment agreements and carry their own basic liability insurance which Cognition tops up through an outside provider. This structure allows management decisions to be quick, decisive and focussed on long-term goals; unlike the herding of cats decision-making process that plagues traditional big law firm partnerships. A question as to why Cognition was not initially created as a corporation elicits a smirk from Ho who mumbles regret that they didn’t move to that model in the first place.
Interestingly, while Cognition offers fixed-fee pricing, Ho finds clients wary of the concept. However, Ho says that after working with Cognition for a few months, many clients gravitate to a fixed-fee model to achieve budget certainty.
Legal project management, a key element of fixed-fee billing, is still in its infancy at Cognition, but Ho sees this as a growth area where the firm may hire an in-house legal project manager who could also be seconded out to clients.
What’s most striking — and refreshing — about Cognition is its relentless focus on controlling costs at all levels of the organization; after all, the lower your costs, the more profit you make. Moreover, Cognition’s approach of viewing legal services as an industry (with many components and delivery options) clearly serves notice that the natural life cycle of law firm structure and service delivery is nearing its end.