The term for these backward knees, should you need to research them is digitigrade legs. There are two ways that I know of to achieve this look, and it depends on you and what you're comfortable with.
The first is a the more difficult option, and that is to build around a pair of stilts.
http://fc06.deviantart.net/fs21/i/2007/260/9/7/Digigrade_Leg_Design_by_hekatelesedi.png
http://www.youtube.com/watch?v=KKyeAQNFLVk&list=UU7kfFlv0GujXJYndXRsLYyw&index=1&feature=plcp
There are different ways to build them so take your time in researching them. There are tutorials on how to build your own, but only do this if you are fully confident in your ability to make something that will support your weight, and that you'll be able to keep your balance in.
The other is simply by using foam (lots of it!) and building it around your leg:
http://www.youtube.com/watch?v=RIAe2_kEk5k (skip ahead to 1:19 to begin to get info on how one person has done this for a Lugia costume. There is no commentary, but the visuals should be enough to give you some idea - check out their panel on cosplaying creatures too. It might help with other aspects of the costume)
Hope this helps, if only a little. Generally I go out there and see what other people have done, and build it into the current design, so you'll not have the same shape as lugia, but you can chop and sculpt the foam to how you want it, and add claws and so on.
Best of luck!
