The New World of Corporate Lawyering in Japan

I. BACKGROUND Tokyo used to be a sleepy little legal market for most US law firms. There were exceptions of course, but the Tokyo presence of a number of international firms with a Tokyo office amounted to a single partner. In fact, while firms may have made grander claims as to the number of resident lawyers, some Tokyo offices of major international firms comprised nothing more than an ill-attended fax machine and a skeletal secretarial staff, supplemented, on an as-rarely-needed basis, by visiting lawyers from other offices. Many of the lawyers that did reside full-time in Tokyo offices spent a significant portion of their time knocking on doors in Japan and other countries in Asia, or assisting with overflow work from deals originating in Hong Kong and elsewhere. That has all changed. Despite a prolonged economic recession in Japan-or perhaps more correctly because of it-and a downturn in the world economy, the Japanese offices of many major international law firms have been busier in recent years in terms of average hours worked per lawyer than any other office in their global networks. In fact, except for the grandfathering of a handful of foreign lawyers that began practicing in Japan within a few years after the end of the Second World War, it is only since 1987 that foreign lawyers were legally permitted to set up shop in Japan,' IMAGE FORMULA5 and even then under restrictive conditions designed to thwart their success and limit their influence on the practice of law in Japan. Foreign lawyers had to go through a lengthy application process to claim the lofty title of gaikokuho gaikoku jimu bengoshi ("foreign law solicitor" or "GJB," as foreign lawyers use the term), could not hire or form partnerships with Japanese lawyers, and were restricted in their ability to use their firm's name. A number of gradual reforms have encouraged the emergence of a less abnormal market for international legal services in Japan, though remaining restrictions continue to retard the emergence of Japan as an international legal services market consummate with its global economic importance. Prominent GJBs in Tokyo seeking "unrestricted freedom of association" between foreign and Japanese lawyers continue to go head-to-head with protectionist elements within Nichibenren (the Japan Federation of Bar Associations). Even today, foreign law firms cannot hire Japanese lawyers directly (though curiously, foreign businesses can) nor form partnerships with Japanese lawyers, though a number of firms have taken advantage of a limited form of joint venture, unique to associations of non-Japanese lawyers with Japanese lawyers, called a tokutei kyodo jigyo ("joint specified enterprise"). I am an associate at the Tokyo office of Sullivan & Cromwell, an office that, including the two Japanese lawyers in the tokutei kyodo jigyo, has grown from five lawyers to twelve in the three years since I transferred to Tokyo from the New York office. The former office was a three-lawyer office suite located in the metallic gray halls of a Japanese insurance company and facing the grounds of the Emperor's residence. Air-conditioning at the old office shut off automatically at 6:00 p.m., presumably not a problem when working past that time may have been less common, but, if the workload warranted it, it gave rise to literal "sweatshop" conditions during the humid summer months in Tokyo. My first workspace there was the one and only conference room, overlooking the train platforms and bullet trains of Tokyo Station. Soon after my arrival, however, we moved into more spacious digs in one of the most modern office buildings in Tokyo-a move motivated by a skyrocketing increase in demand for international legal services. The new space is now fully occupied, and the Tokyo office has been perhaps the busiest office of the firm in recent years on a per lawyer basis. Although twelve lawyers is a small number for a major firm in most other major legal markets, it is larger than the size of most Japanese firms, a mid-size presence for the Tokyo office of a US law firm, and the largest US law office in Tokyo focusing on capital markets work. …