It's the second, the first one would've have to say 15% in all your cities.
I just fired up a 9-city Tradition game (don't ask)
I'm kinda bummed that it works in puppets - limiting their growth is hard enough as it is. (And, FWIW, ToA also works in puppets, which makes puppet pop management even harder.)
Any city (founded yourself, puppeted, annexed or (worst of all) in the process of being razed) that you own when you adopt Legalism will get the free culture building. Any city you found after that time (up to your 4th of course) will get the free culture building; any city you conquer will not.
Any city (founded yourself, puppeted, annexed or (worst of all) in the process of being razed) that you own when you adopt Legalism will get the free culture building. Any city you found after that time (up to your 4th of course) will get the free culture building; any city you conquer will not.