Japan law firms rush to set up in Asia

by Takuya Hatakeyama

Kyodo

Japanese law firms are scrambling to open offices throughout Asia as they chase corporate clients exploring opportunities in the region.

When Toridoll Corp., which operates the Marugame Seimen udon restaurants, including in the U.S. and Russia, inked a deal last year with a Chinese company to set up a joint venture, it enlisted the help of a Japanese law firm with an office in China.

“The presence of a (Japanese) law firm is reassuring as we can seek advice at any time,” a Toridoll official said, referring to the hazards of doing business abroad.

Oh-Ebashi LPC & Partners opened an office in Shanghai in 1995, making it an early adopter of internationalization among Japanese legal firms, which generally avoid venturing abroad.

“If lawyers step in and scrutinize local laws, they can offer advice so that future risks can be averted,” said lawyer Michiko Kanai at Oh-Ebashi LPC & Partners.

Japanese law firms have been advancing into China since the 1990s, mainly in Beijing and Shanghai. Demand rose as many companies attempting to gain footholds in China began encountering legal problems related to acquisitions and other deals.

Around 2010, Japanese law firms began setting up shop in Southeast Asian countries, including Singapore, Vietnam, Thailand and Myanmar. In Singapore, five major firms have opened offices or are planning to do so in the business year ending next March.

In May, Nishimura & Asahi LPC, the biggest law firm in Japan, established an office in Yangon, the largest city in Myanmar. Seen as Asia’s last frontier because of its untapped economic potential, Myanmar is expected to draw a swarm of Japanese companies if its democratization progresses.

Until recently, Nishimura & Asahi supported Japanese firms doing business there by sending in lawyers from outside. Now that it has a permanent presence there, the law firm “wants to serve as a bridge for client companies to cross to the country without worries, by collecting accurate information from local sources,” said Yusuke Yukawa, the office’s representative.

The rising Japanese legal presence in Asia parallels a growing army of small and midsize firms moving into the region in the quest for new markets. “Larger companies can turn to their own legal affairs departments when dealing with problems, but smaller ones don’t have such an option,” Kanai said.

Last August, Nishimura & Asahi opened offices in Osaka and Nagoya to better serve the needs of companies based outside Tokyo planning to make forays into foreign markets.

Despite their expanding footprint in Asia, Japanese law firms are far behind their U.S. and European counterparts.

For example, Baker & McKenzie, a global law firm headquartered in the United States, has 73 offices spread across 46 countries. Meanwhile, even the biggest Japanese law firms are present in just more than a handful of countries.

Part of the reason for the negligible overseas presence may be because Japan’s giant trading houses, with their global reach and extensive business savvy, already act as legal advisers to their business partners.

The central government, however, is moving to give the lawyers a helpful push. In April, an advisory council under the Cabinet Office released a report stressing that lawyers need to hone their international skills so they can support companies looking to expand overseas.

In November, the Justice Ministry, together with the Japan Chamber of Commerce and Industry and the Japan Federation of Bar Associations, established a consultative council on ways to back firms’ cross-border efforts.

However, some countries impose strict limits on foreign lawyers’ activities. India in particular is known for its tight regulations.

Japan’s government has a role to play in removing obstacles like that, says Eriko Hayashi, who heads Oh-Ebashi LPC & Partners’ Shanghai office. “To assist Japanese companies operating abroad, it would be useful if the government calls for lowering of barriers.”