Japanese law firms are increasingly looking overseas, establishing new offices as they expand their footprints in the face of more competition for domestic work.
In the past few months, Anderson Mori & Tomotsune, Mori Hamada & Matsumoto, TMI Associates, Nagashima Ohno & Tsunematsu, and Miura & Partners have all established new overseas offices or announced plans to do so.
In recent years, Tokyo’s law firms have sought to tap into markets with a high volume of Japanese businesses, chasing high-value mergers and acquisitions deals, joint venture establishments and advisory work.
Mori Hamada & Matsumoto, which has offices in key Asian hubs, announced plans for a New York office in March. And TMI Associates, which has aggressively expanded overseas, announced plans for a Paris presence the same month.
This month, Anderson Mori & Tomotsune added an additional office in Vietnam, while Miura & Partners — which has offices in Jakarta and San Francisco — is expanding its overseas reach with a planned London office.
Masayuki Atsumi, a partner at Miura & Partners — a full-service law firm founded in 2019 — said the driving force behind overseas expansion was client demand for a “one-stop legal service in multijurisdictional matters.”
“As we have received many requests from our Japanese clients on legal issues outside of Japan, it is our logical decision to have a presence there to better service our clients,” Atsumi said.
Isaac Uchiyama, head of business development and operations at professional services firm EY Law Japan, said the “baseline driver” for Japanese law firms expanding overseas is the “continued and unresolved existential crisis of depopulation, which has shaped Japan Inc.’s outbound investment, and Japanese firms are simply following the money.”
At the same time, major international law firms are well established in Japan, with rosters of lawyers qualified in both foreign and Japanese law, which allows these firms to handle Japanese law issues in-house, Uchiyama said, noting that international firms are “cashing in on both ends, while Japanese firms are mostly limited to a domestic, inbound revenue stream.”
Foreign firms are also continuing to bolster their presence in the Japanese legal market — U.K.-headquartered Linklaters added a new partner to its Tokyo practice in May, U.S. firm Mayer Brown hired its third Tokyo partner this month and K&L Gates added a finance lawyer to its team.
As a result, domestic firms are increasingly seeking to bolster their profitability by looking to build overseas alliances and poach locally qualified partners in new markets.
While local connections may help Japanese law firms gain a foothold with Japanese companies overseas, Uchiyama said that major firms “aspire to not just be viewed as ‘Japanese firms’ but to be regarded as ‘international law firms’ like their foreign counterparts here in Japan.”
Indeed, Atsumi of Miura & Partners said that the plan for the firm is to continue to grow in new markets.
“The firm’s long-term goal is to become a truly international law firm, and we do not exclude any possibility to achieve this, including opening new offices, strategic alliances with or acquisition of existing law firms in each jurisdiction with growing legal needs,” he said.
But according to Uchiyama, Japanese firms — particularly those with distinctly Japanese names — face a challenge over perceptions, with their brands not necessarily conjuring the image of “being an international standard and capable law firm, even if they have a U.S., U.K. or local law-qualified lawyer in their new market office.”
“The reason U.S. and UK firms have been the most successful at expanding overseas has much to do with the fact that cross-border business contracts are mostly governed by English or New York law as international standard,” he said.
As a result, there is something of a halo effect for those firms, which Japanese firms may not necessarily benefit from.
This may also feed into the challenges Japan has faced in making itself a more attractive choice for international arbitration cases, with the country continuing to trail behind Hong Kong and Singapore.
In 2017 the Cabinet approved a policy to “develop a foundation to activate international arbitration” in Japan, framing it as one of the key planks of the government’s agenda. The following year, the Japan International Dispute Resolution Center (JIDRC) was established to support the policy’s implementation.
In March 2020, the JIDRC established a facility in Tokyo for international arbitration hearings, although it closed at the start of June, with the group planning to provide a “different mode of service.”
In 2021, an economy ministry report suggested a lack of awareness was part of the reason why the number of arbitration cases handled by Japanese institutions had not increased.
Brand positioning is also a challenge for Japanese firms pushing to compete overseas against well-established U.S.- and U.K.-headquartered firms.
“Branding is probably the biggest challenge to success, while regulatory restrictions are something that needs to be sorted out before (Japanese firms) enter the market,” Uchiyama said.
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