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Hideo Norikoshi was 10 years into his diplomatic career when a partner at a British law firm offered him a chance to throw it all away and study law in England.

Norikoshi, now a partner at the Tokyo office of English law firm Linklaters, said the decision came easily to him one night while he was lying in bed. “I wanted to be different from everyone else,” he explained.

The 45-year-old barrister is a rare Japanese national registered here as a “gaiben” — a lawyer specializing in foreign law. Most gaiben are non-Japanese, well-versed in business law, and work at foreign-based law firms in Japan to support companies from abroad.

Regardless of their nationality, however, gaiben are rapidly changing how legal business is done, from complicated international contracts to corporate rehabilitation.

Foreigners and foreign companies are not the only ones hiring them. The turbulent economy is convincing Japanese companies to seek gaiben out for advice on how to survive or grow, leading to a sharp rise in their number.

Registered gaiben approved by the Justice Ministry to date number 187, up 25 percent from March 2001 and more than double the 80 registered five years ago.

Roughly 60 percent have law degrees from the U.S., 16 percent from the U.K. and 5 percent from China.

The rise is due in part to looser legal requirements and a 1998 reduction in the number of years that a foreign-based lawyer must practice abroad before he can qualify to practice in Japan. The latter figure was reduced from five years to three.

“It’s not an easy market,” said Laurent Develle, a French lawyer at White & Case LLP. Develle worked for a Japanese law firm for three years before taking up his current post in 1997.

“But it’s also one of the few legal markets in the world that is expanding.”

Among the difficulties faced by foreign lawyers are government restrictions.

While lawyers versed in Japanese law are licensed to provide legal advice on overseas law, gaiben are prohibited from providing advice on legal matters pertaining to countries other than those in which they specialize.

There are also the usual language barriers and the risks of miscommunication with headquarters that arise from practicing so far from home, Develle said.

But business code changes and renewed corporate restructuring efforts are fostering new opportunities.

In the five years since he joined White & Case, the number of lawyers there has grown from 20 to 60, he noted.

The same held for Linklaters’ Tokyo office, which expanded its legal team from 20 in 2000 to 32 this year.

“Companies are scrapping old business models, and are more willing to try more joint ventures with foreign companies overseas and more willing to try new financial products with few precedents in Japan,” said Mark Hunsaker, a partner at Linklaters.

Linklaters helped to transfer the ADSL high-speed Internet operations of telecommunications conglomerate Japan Telecom Group to eAccess Ltd. in August and transfer Japan Telecom engineering companies to U.K.-based real estate operator Bovis Land Lease.

Other Japanese firms are more desperate. They consult gaiben who, based on overseas examples, find ways to divide or rehabilitate companies, negotiate deals or parcel off assets.

“Japan’s banks are in so much turmoil,” Develle said. “So many companies just don’t know what to do right now.”

Corporate bankruptcies are at a record high, testifying to the number of firms in need of sound business advice.

But the legal market remains far from crowded, with the number of Japanese lawyers who specialize in commercial law estimated at just 5 percent of the total.

The high level of bankruptcies continues to attract foreign players eager to invest in golf course sites, parking lots and empty buildings.

According to the Justice Ministry, the 14 registered foreign servicers together had purchased 29.5 trillion yen worth of debts as of June, or 46 percent of the total obligations purchased by the 65 private debt-collection firms registered.

“There are treasures of untapped resources for securitization,” said Kenichi Ueda, executive director of the Tokyo office of U.S. private equity firm Ripplewood Holdings LLC. “It’s just a matter of convincing people to stop giving up and that it’s time to move forward.”

“There are few Japanese lawyers who have the kind of negotiating experience we need when hammering out transnational deals, which are usually based on Anglo-American legal practice,” said Yasushi Momose, director general of the project finance department at the Japan Bank for International Cooperation.

Some of the deals — in which both domestic and foreign banks invest in building energy plants or highways overseas — require finesse with tricky financial products, transnational contracts and securitization. The first instinct is to go to a foreign law firm, he said.

JBIC has commissioned foreign law firms with branches in Japan to handle all nine overseas project finance deals currently in motion, Momose said.

Each deal is worth roughly 400 million yen to 500 million yen in legal fees, he estimated.

The perception that the business skills of Japanese lawyers fall short of those possessed by gaiben is putting pressure on the Japanese to prove themselves. This sometimes takes the form of acquiring legal credentials overseas.

From a walk in the park to enhanced contacts abroad, these programs are fast becoming a prerequisite for young lawyers who want to get ahead.

Makiko Yamamoto, a lawyer at Tokyo-based TMI Associates, specializes in domestic civil cases. Even so, she said that she is applying to get a foreign law degree in the next few years.

“Studying law in another country helps you understand Japanese law better, in contrast,” Yamamoto said. “Plus, you just never know when that kind of knowledge will come in handy these days.”

Her firm has promised its 57 lawyers a chance to gain a master’s degree in law overseas.

Japanese lawyers and students with an undergraduate degree in law can take the bar exam after a year of study at a law school in the U.S.

But Japanese law firms need not worry, said Ueda of Ripplewood, which continues to commission large Japanese law firms for its deals.

The largest in Japan employ some 90 lawyers, have contacts abroad and are better than their foreign counterparts in offering an integrated, speedy approach, Ueda said. “This is Japan — when you are negotiating with Japanese customers, you want to make sure you win their trust and that there are no misunderstandings at that stage.”

Nonetheless, using Japanese lawyers alone can be costly for U.S.-based firms like Ripplewood. Most American clients negotiating transnational deals end up having to hire two law firms — one in Japan and another in the U.S.

Overseas businesses argue that more free association between gaiben and Japanese lawyers, and having the two teams work side by side, would make the process much more efficient.

Government deregulation in 1995 has allowed attorneys from overseas to form a joint enterprise with a Japanese law firm, under strict conditions. Only 23 such enterprises have started up since 1995.

Although regulations have since been relaxed slightly, gaiben are still barred from being partners and forming a single business unit.

But not everyone is calling for more deregulation.

Some members of the Japan Federation of Bar Associations fear that allowing foreign lawyers to form partnerships with Japanese lawyers will open the floodgates to multinational firms, ultimately leading to what happened in Germany, where a series of mergers in the largest firms resulted in them becoming U.K.- or U.S.-based, not “pure” German.

“But does that matter?” asked Andreas Kaiser, a German lawyer who lectures at the legal department of Chuo University.

“In a 60-person firm, you will find 58 people are German. Germans are best at knowing German law. Japanese are best at practicing Japanese law. That goes without saying.”

Develle, meanwhile, said, “If Japan wants to be the financial center in Asia, you need accountants, consultants and lawyers. That’s just how it’s done.”

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