For international firms, one of the main bug-bears of practising in Japan is the restriction that prevents foreign firms employing or forming partnerships with Japanese lawyers, or 'Bengoshis', as they are known.Charles Stevens, managing partner of London firm Freshfields' Tokyo office, is renowned for being a champion of foreign lawyers' rights and a fierce lobbyist against this restriction, which government-appointed reform groups are currently reconsidering.He says: 'It's a pointless restriction.

I would say it puts off many other foreign firms who were looking for an unrestricted partnership.

In another two to three years it may change, but Japanese law always takes longer than anywhere else to change.

We're talking 2000 years of history here and 300 years of excluding foreigners.'Lawyers are traditionally more conservative and here they are very protectionist.

They have only allowed change recently, not because they think it is a good thing to do but because they have been dragged kicking and screaming into liberalism because they realise they need foreign capital.'He adds that the Japanese government is increasingly coming to realise that to facilitate this foreign investment, appropriate legal services need to be made available.Rob Burley, Clifford Chance's managing partner in Tokyo, says: 'There has been constant lobbying and pressure for change.

It would mean a big liberalisation if foreign firms could merge with Japanese firms, but I think the necessary regulatory change is some way off.'He says part of the reason for the resistance to change is that Japanese law firms may fear that foreign law firms want to 'take over', which, he says, is far from the truth.

'Foreign law firms just want to be able to provide Japanese law advice on business international issues.

It's not a case of wanting to take their work.'Knowledge of Japanese law, he says, is becoming increasingly important in transactions because although UK and New York law is used in deals, ma ny documents involved are ruled by Japanese law.Freshfields, like Clifford Chance, has opted to form a joint association with a local firm, which, says Mr Burley, fulfils the aim of providing an integrated service on a deal, which often requires legal advice from both a Japanese and a UK or New York perspective.

However, this route is one which London firm Herbert Smith has rejected.Steve Lewis, Herbert Smith's managing partner in Tokyo, says: 'Maintaining quality is of paramount importance to us.

For that reason we do not have a joint venture or association.

We prefer to act in informal associations with quality lawyers from various local law firms who are experts in the required field.'Japanese lawyers often see the likes of Freshfields as a competitor because of its joint association.

We are not competing against Japanese law firms, we are working with them.

They don't see us as a threat and we have seen our referrals increase dramatically because we are not tied to one firm.'Simmons & Simmons partner Martin Saywell helped negotiate the qualified joint venture between his firm and TMI, with which the City firm had an informal relationship for three years before its association went official last month.He says: 'We had increasingly been using TMI whenever we had Japanese-related work through-out our network.

It was on a non-exclusive basis but the joint venture itself is not exclusive -- it's on a best efforts basis, because they have their own clients who may have an established legal relationship outside, as we have clients who may be using other Japanese law firms.'We have to recognise this is a joint venture between two established full-service firms and we're going forward to make the most of the association.

From both our perspectives, we're looking to work more and more closely together.'He says that up until now, overseas firms generally were formed from a small group of partners or disparate partners put together, meaning that in addition to making the joint venture work, firms had to make individuals work together.Such an approach can backfire.

For example, Allen & Overy recently lost its only Japanese lawyer to US firm Orricks.Mr Saywell says: 'This joint venture is ground-breaking, because it is the first time established firms have come together to give an integrated service with access to a deep pool of experience and knowledge among Japanese lawyers.'Japan's long recession, he says, has resulted in the need for a lot of foreign capital being invested in Japanese assets, meaning Japanese legal advice is often required: hence the joint venture.The recession has heralded a change of emphasis in the work lawyers in Japan concentrate on, with restructuring being the predominant work at present, according to Mr Stevens.'Many companies have realised that their present formation is not viable or they are facing insolvency.

A lot of the restructuring depends on foreign investment, which means doing agreements in Anglo or US style -- which is why foreign lawyers are important.'He says that as far as the economy is concerned, the Japanese Prime Minister, Junichiro Koizumi, has effectively 'driven it off a cliff'.'The cabinet is trying to encourage restructuring rather than providing stimulus packages which are on the road to nowhere.

They want to make companies confront the issue of insolvency and either restructure or go under.

It's a little bit like chemotherapy -- you need something bad to get the rot out of the system.

All this requires lawyers, so it's good for us.'The law firms seem to have ve ry different plans for future expansion.

Mr Lewis says that of Herbert Smith's four main departments -- banking and finance, mergers and acquisitions, projects and dispute resolution -- the latter field is growing most dramatically.'Dispute resolution is going ballistic.

The Japanese are litigating for the first time in living memory.

The economy is so tight, so that while in the past business relationships were more important than profit, they are now so desperate for money that they are going after people if they don't pay up.'Also, many have US investors so they can't go for the easy fix and settle -- they are too worried about shareholders litigating against them.

It's great for us.'He says that when Herbert Smith set up in February 2000, it had only six lawyers -- a number which has grown to 15 since then.

Consolidation, he says, is probably the way forward.'The world is pretty uncertain at present.

M&A relies on UK and US economies and they are not strong at the moment, while projects depend on the Japanese market being strong and it's not right now.

Dispute resolution is an area which thrives when the economy is weak, so that may be an area we may expand.'However, Freshfields appears to be raring to go on the expansion front: the Tokyo office currently holds 22 Bengoshis and 17 foreign lawyers but Mr Stevens expects to see the lawyer count increasing to between 60 and 100 in the next few years.'This is not mindless expansion we're talking about; there are some very big deals being done which need at least 60 lawyers to work on.'Mr Burley says: 'The market is depressed right now.

There has been a downturn in the economy and then you have the events of 11 September.

We are not going to expand without reference to the market, but if any expansion does take place, it would probably be on the Japanese side of the joint venture.'Mr Stevens says that the long- term effects of the 11 September terror attacks on the US are so far unclear, but some consequences are obvious.

'I have to go through a road block every day to get to work, but since the office is about 100 yards from the US embassy, this is hardly surprising.'He is a big fan of Japan: 'I just love it here, Tokyo is such an exciting, 24-hour city.

It's a really fun place to be.' The main thing the Sussex boy misses about the UK in fact, is his favourite beer.Mr Lewis says that Japanese clients -- although generally quite demanding -- are nevertheless extremely loyal if lawyers do a good job for them, and are also extremely good at paying their bills.! 'Personal relationships are important to them -- they are loyal to an individual rather than the firm, which is opposite to the situation in the UK.'So, what sort of lawyers would be suited to the Japanese way of life? Mr Lewis says: 'First and foremost, they have to be very good, competent lawyers, who are pretty independent.

They should be fun-loving and good at getting on with people.'One thing is for sure, it is a good idea at least to get a working knowledge of the Japanese language.

Mr Stevens says: 'Most of our senior lawyers speak Japanese.

It's not necessary that everybody does, but it is important in terms of understanding what Japanese law is about.

On a personal level, it also makes you feel more comfortable in society.'While the recession may mean less visits to your favourite sushi restaurant, next year's World Cup -- which is being held in Japan and South Korea -- will offer lawyers a timely distraction from domestic worries.