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How IT major Cognizant cut costs, grew legal headcount from 1 to 70 in six years


“Typically what legal departments deal with is being primarily considered as cost centres of a company. Most in-house teams are perceived as mere support functions rather than actual partners or facilitators of business. Our role has changed because we are not a cost-centre anymore,” claims Anand Bhushan, the Asia Pacific (APAC) general counsel at Cognizant Technology Solutions, India’s second largest IT company.

When Bhushan joined Cognizant as its APAC legal head in 2007, the challenge before him was to reduce the drag of external lawyers’ $600 to $700 hourly billing rates on the revenues of the Fortune 500 company.

Today, six years later, he says “Cognizant’s total legal spend stands at one-fourth of its peer competitors”, though the figures are estimates that are not publicly reported. Meanwhile, the company has jumped 46 places to be ranked 352 from 398 on the Fortune 500 list of largest US companies, and its revenue has grown in the last decade from around $400m to $7.5bn. The company’s total workforce stands at approximately 160,000 employees worldwide in 60 group entities.

Cognizant provides technology, consulting, network, mobility, analytics, cloud, finance services and more to multi-jurisdictional clients in various industries. Lawyers need to draft technology service contracts for these services, secure intellectual property assets, manage strategic alliances, monitor data privacy and compliance programs, and oversee mergers and acquisitions, corporate governance and labour law compliance. Doing all that externally wouldn’t come cheaply.

“In the service industry at the technology stage the level of legal involvement is so much higher. Why? For the one reason, that every customer contract is a different piece of paper,” claims Bhushan.

When he joined in 2007, he was the only lawyer. Today the team stands at 70.

“We’ve cracked the formula [behind reducing legal spend] and that is why we have grown from four lawyers in 2007 to 70 today,” he says about Cognizant’s headcount growth that has rivaled that of law firms.

The handy work of 70

Cognizant customers usually come to the company with at least one of three issues: technology; increasing efficiency in their business; transforming their current manner of operating.

The legal team’s corollary would be to draft the master services agreement that sets out the scope of engagement, which could then result in drafting sale deeds for real estate services, patent applications for intellectual property (IP) services, or employment contracts for human resources (HR) and labour related work.

“The technology service agreement, the master service agreement and the technology contract – sale deeds, patent applications, employment agreements - is what drives value for the business,” he explains.

Specialists in the department of 70 deal with each of these contracts, with titles such as: global licensing, data privacy, global alliances and partnerships, IP, litigation and human resources, global procurement and vendor services, compliance, US/EU support, contract life cycle management, corporate governance and India secretarial, and emerging business practices.

“At Cognizant we have a fairly flat operating structure,” says Bhushan. “While we have set up different specialisations we encourage cross functional specialization. We encourage our lawyers to take up other teams and grow their skill set.”

Around six lawyers, who also hold engineering degrees, exclusively focus on Cognizant’s patent portfolio. Another branch of around five lawyers deals with licensing technology to end customers or acquiring technology from third party service providers, such as HP. A team of five company secretaries deals with corporate governance work, including board meetings, resolutions, statutory hiring and statutory declarations.

“There’d be a handful of companies that have that type of expertise. That type of specialty from the ground up needs tremendous investment in time, effort, resource and training,” says Bhushan.

Each specialist vertical is headed by a corporate counsel who has a managerial role towards his portfolio including hiring and training of the team.

Cognizant Legal APAC

Bhushan: 'Young, experienced, hungry, ambitious'
Bhushan: 'Young, experienced, hungry, ambitious'
Bhushan himself, who is on Cognizant’s board of directors for the APAC region, monitors all compliance and corporate governance-related issues as well. A typical day for him could consist of dealing with data security and data privacy teams to coordinate with global best practices, interfacing with the company’s business units, or jumping on client calls and being involved in deal closings.

“We do a lot of preventive lawyering to ensure that a highly effective lean machine is operated across the company to prevent disputes from arising in the first instance”, he adds.

Structurally, Bhushan reports to Cognizant’s group general counsel (GC), Steven Schwartz, who is based in the US and is also the boss of the GCs for North America (who heads a team of 30) and Europe (with a team of 15).

Bhushan explains that Schwartz’s vision of global integration resonates with all of Cognizant’s legal teams – for example, a lawyer in Cognizant’s Bangalore office could file the US patent application of a customer whose licensing work is handled by Cognizant’s North America practice group.

Cutting corners off bills

In India, Cognizant gets assistance on mergers and acquisitions and regulatory compliances from a panel of 10, including some of India’s largest firms such as Amarchand Mangaldas, Dua Associates and Khaitan & Co, as well as Individual practitioners. Bhushan says he reviews the panel every year.

“What is peculiar to the service industry is that every customer contract is different – the delivery model is different, the locations are different, the scope of work is different, the timelines are different, the technology used is different.”

Bhushan figured that the captive cost of an in-house legal team, compared to need-based costs of external counsel with hourly billing rates approaching $700, was more conducive to the company’s requirements, where lawyers could spend dozens of hours on each unique client contract.

Based on volume and price he began growing the in-house team in Cognizant’s bread-and-butter, technology service contracts, and in “niche concepts” – an area where law firms often charge a premium.

Lost in transaction

"Unless there is a language barrier (for instance in Japan the language of negotiation is still Japanese), we do not rely on outside counsel for our work. But in Australia and New Zealand if we can get dual-qualified lawyers who have degrees either from Australia or North America, our goal is to do all transactions in-house, and there we have substantial savings. So on sheer volume we manage to cut it down by getting suitably qualified people.

"There is also a high demand in the market for niche practice areas because the technology landscape and business models are constantly changing. Odds are you’re speaking to me on your smartphone now. Odds are you’re using your BlackBerry more than your desktop computer. All these technologies need to be secure, protected, and licensed – and that is a high-priority area, because it’s such a niche concept. The laws keep changing frequently around it.

His main focus in growing the team size has been on hiring dual-qualified lawyers with multi-disciplinary degrees.

"If you’re seeking engineers-cum-lawyers, it is a rare skill set. We have lawyers who are visiting professors at IITs, lawyers who founded intellectual property teams in their previous organisations and managed an entire company’s IP portfolio. So those are the kind of people we hire. We set up the team from scratch to accommodate such expertise."

"Then technology licensing contracts – we have a dozen lawyers who are multi-jurisdictionally qualified. If you ask me how a lawyer in India knows how to service a contract in North America, several of our lawyers on our team have dual degrees. Even our technology team, our core team of corporate contract lawyers – most are multi-jurisdictional lawyers. They also have other specialisations like an MBA, other than a foreign law degree."

Age advantage

Finally, Cognizant APAC legal is young. Practice head Bhushan has all of 10 years experience after graduating with an LLB from Dr Ambedkar Law University Tamil Nadu in 2002, and an LLM as a Fulbright scholar in corporate and cyber laws from Case Western Reserve University School of Law in the US. He practised independently for five years, when he was a consultant for companies Bharatmatrimony, Jaya TV, Aurofood, SAAG RR Infra, and FL Smidth, until joining Cognizant in 2007 and setting up its divisions.

“The core area is the youth of our team and this is what we tell our people when we’re recruiting. We don’t confuse age with experience. We have a very young team of very experienced lawyers. They are hungry, they are ambitious, they are eager to learn more, they are eager to bring more value to the business,” says Bhushan.

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