‘I was being nickelled and dimed to death’
Jim Middlemiss
Sun
Milestone and Ho with client Yale Holder (centre). Photograph by: Tim Fraser, National Post
Yale Holder had enough of large legal bills, after his law firm sent him an invoice for $10,000 in August. His company, in the startup stage, was being billed for every little call.
“I thought, we can’t survive this way. That’s when we started to look for another legal team.” The founder of myCellmy– TERM.com, a company that lets consumers propose their own cell-plan terms to wireless providers, ditched his large, full-service law firm and switched to a nimble, virtual firm of 19 lawyers.
By moving his legal business to Cognition LLP, Mr. Holder says he cut legal costs by an astounding 60%. “I was being nickelled and dimed to death.” Cognition is the brainchild of lawyers and neighbours Joe Milstone and Rubsun Ho.
About four years ago, they were “trying to figure out what we were going to do with the next chapter of our lives,” Mr. Ho said. Both men had recently left their employers.
Mr. Ho, who cut his teeth at a Bay Street firm, had been at a technology startup that raised $US60-million at the height of the tech boom.
Mr. Milstone had worked as an in-house lawyer at a couple of companies. Both were doing legal consulting.
They learned through their in-house experience just how much companies spend on legal bills and how much of that money was “wasted on stuff we shouldn’t be paying for,” Mr. Ho said.
Mr. Milstone said he realized just how few companies have the benefit of an in-house legal advisor and saw an opportunity.
“You either hire your own in-house counsel, which for most companies is totally not on the road map. Or you go with the traditional outside law firm model, which does not really get you the proactive internal advice you need and is prohibitively expensive. We felt we could do something to fill that gap.” The men also realized they could do it cheaper by not carrying the overhead of a traditional law firm.
They maintain a small office in Toronto off the Bay Street corridor and most of their lawyers work at the client’s site a few days a week or from their own home office. It allows the firm to reduce their fixed e xpenses. T he firm’s lawyers are based in Toronto, Ottawa and Waterloo, Ont.
“We have a team of people we can turn to,” Mr. Rubsun said, adding if the client needs expertise that is beyond its roster of legal talent, they know where to find it.
Mr. Holder said the firm operates like his own in-house counsel. “I can call them and don’t have to worry. “We’re a startup. I don’t have resources to hire [an in-house] lawyer. We call them our legal partners.” Mr. Milstone said about 75% to 80% of the firm’s business comes from growth companies like Mr. Holder’s.
Small and medium enterprises contribute more than half of Canada’s gross domestic product, and they employ about 64% of the country’s private-sector workforce, the firm said.
Mr. Milstone said “a lot of these companies – especially the ones that haven’t necessarily worked with in-house counsel – have a bit of an antiquated view of legal services and shunned it off.” They see it as a “necessary evil to do.” “We want to take the pain out of a company being able to access legal services.” The alternative is not pretty, he said. Companies “wing it.” For example, they try drafting their own licences for intellectual property and end up giving it away. “The risk-reward is not worth it,” he said.
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