Japan is looking to build a global legal services industry. And it’s one that presents more of an opportunity than a threat.
For the 2012 London summer Olympic Games, magic circle firm Freshfields deployed 300 lawyers. In the last Japanese Olympics, the 1998 winter games, the number of practitioners covering ‘all legal aspects’ was eight. ‘Maybe the Japanese are very law abiding,’ Tomohiro Tohyama, of Tokyo firm TMI Associates, told a seminar organised jointly by the Law Society of England and Wales and the Dai-ichi Tokyo Bar Association in Tokyo last week.
Maybe. But doing without lawyers has long been a matter of pride in Japan. The country of 127 million people has only 35,000 registered practitioners (bengoshi); astonishingly, fewer than 1,000 are employed in-house. And while the country’s top five law firms have some international presence - usually in China and Singapore – Japan’s share of the global legal services market is far lower than you might expect for the world’s third-largest economy.
The government has ambitions to change that. Legal services is one of the sectors identified in a liberalising programme known as ‘Abenomics’, after the energetic current prime minister Shinzo Abe, designed to lift Japan from the economic doldrums.
According to briefing notes for a seminar held by the ruling Liberal Democratic Party last week and attended by the Law Society’s head of City and international, Stephen Denyer, ‘it is necessary... to foster the Japanese law firms which are capable of providing organisational legal services. A policy to establish a strategic network with the global mega-firms which have emerged in the global markets is necessary’.
Once upon a time, the announcement that Tokyo had targeted a new economic sector would have sent shivers through incumbent businesses. After all, wasn’t this how Japan triumphed in shipbuilding, car-making, consumer electronics and microprocessors?
Up to a point.
Even in the early years of its postwar industrial triumph, Japan was never a command economy and in some sectors, such as electronics, businesses can claim to have succeeded despite, not because of, government intervention. Indeed the line at last week’s seminar was that ‘the internationalisation of the legal profession will require introduction of the dynamism of the growth of global law firms’ rather than traditional government aid.
It’s also worth recalling how the myth of Japanese economic invincibility tended to evaporate as its businesses moved up the value chain, a process that coincided with the collapse of the bubble economy in the 1990s. Sure, Sony created the personal stereo tape player, but it took the US-based Apple, with its flair for software as well as hardware, to make a go of the iPod. The same seems to go for moves into the service sector, from advertising to legal services.
It is not that Japanese firms lack excellence in these areas, but that the domestic market is sufficiently distinct, and large enough to make international expansion a low priority.
For the government to change this culture will be a long haul, even if the profession is willing to embrace reform. And it remains to be seen whether Japan is ready for a more dynamic legal sector. As I left Tokyo last Sunday, the newspapers were full of a shocking report on the growth of compensation culture, Japan-style.
According to the Supreme Court, the number of low-value RTA actions handled by the summary process have grown five-fold over the past 10 years – to a total figure of 15,428 in 2013. (The equivalent figure in England and Wales was 771,930 claims.) The Yomiuri Shimbun bemoaned the fact that in 93% of such cases, the claimant was represented by a lawyer – up from 59% in 2003. It quoted a judge as saying: ‘Lawyers will often try to extend the trial by rejecting settlements or calling witnesses and a lot of cases are appealed even when there is no prospect of winning.’
So, all very familiar, and yet very different. Whether Tokyo’s efforts to foster legal services will repeat the triumphs of Matsushita and Toyota, or failures of the hubristic 1980s’ attempt to build thinking computers, remains to be seen.
But for the moment the internationalisation of Japan’s legal profession seems to present an opportunity more than a threat.
Michael Cross is Gazette news editor