The Journal The Authority on Global Business in Japan

ADVOCACY | LEGAL ISSUES

FEBRUARY 2015

Progress and Goals

Regulatory reforms for foreign lawyers and firms

By Eric W. Sedlak

Since the early 1980s, the American Chamber of Commerce in Japan (ACCJ) has urged the Japanese government and the self-regulating Japan Federation of Bar Associations (Nichibenren) to liberalize the rules under which foreign lawyers in Japan may practice their home-country law and may work together with Japanese attorneys (bengoshi).

The law was originally amended to allow foreign lawyers to register to practice home-country law in foreign law offices in Japan. The law was further amended to allow the establishment of Japanese offices of international legal firms run jointly with bengoshi.

Close to 300 bengoshi now work in such offices, and almost all large Japanese legal firms have registered foreign lawyers on their teams, in some cases as full partners. Over 50 foreign law firms now have offices in Japan, and many individual foreign lawyers have solo practices.

So what’s the problem?

The Japanese government and Nichibenren still need to address three outstanding issues:

1. The requirement that two years of qualifying practice be outside Japan lacks a rational basis and discourages many promising foreign-qualified lawyers from working in Japan;

2. The 60-day processing time for registration, which the government promised in the 1980s, remains pending;

3. The branching and legal entity formation rules discriminate against foreign law firms.

The first requirement is unjustifiably restrictive and has no connection to the interests of clients. Experience obtained in Japan should be treated the same as that obtained outside, for purposes of the three-year experience requirement for registration of foreign lawyers.

The requirement fails to recognize both the growing number of foreign lawyers now devoting significant periods of their careers to serving clients’ needs in Japan and the depth of the experience received by associates working in Japan under the supervision of gaiben (registered foreign lawyers) and bengoshi.

In practice, some law firms are reluctant to hire entry-level US lawyers in Tokyo, as they must later be placed in another office abroad for two years.

Otherwise, firms must hire lawyers in the United States who will be sent to Tokyo after several years. Non-Tokyo offices may hesitate to assign quality work to junior associates whose future career will be elsewhere.

Each of these scenarios is handled on a resource-draining, one-off basis. Reassignments also disrupt relationships—working relationships with clients, partners, and colleagues, as well as personal relationships with friends, significant others, and spouses with their own careers.

As to the second requirement, the registration process for foreign lawyers remains cumbersome, with many applications taking four to six months to process from pre-screening to registration. This should be streamlined.

An application can be reviewed in an hour or so, and Singapore conducts the same review with less paper in a few days as part of its visa application. Nichibenren and local bar associations should simplify the process by eliminating the month-long delays between in-person meetings.

Regarding the third requirement, all law firms in Japan should be allowed to open branch offices without becoming a legal professional corporation (bengoshi hojin).

Under the current law, even that option will be available only to Japanese firms and to foreign firms dealing exclusively in foreign-law matters, not to foreign firms with joint operations that may provide Japanese legal advice.

We are grateful for the improved spirit of openness that Nichibenren and the Ministry of Justice have shown to the foreign legal community. Nichibenren has asked for the ACCJ’s comments on guidelines to implement recent legislation. The ministry has also reached out to us to recommend members for several study groups on outstanding issues.

We welcome that openness and hope that the remaining issues can be resolved within a year or two after the study groups report their findings.

Foreign lawyers work in Japan because we enjoy living here and working with Japanese clients and colleagues. It would benefit all involved to make working as a foreign lawyer in Japan easier.

For more information see the ACCJ Viewpoint
Ensure Equal Treatment and Rationalization of Gaiben Administration

DividerEric W. Sedlak handles M&A and projects at Jones Day and is a vice president of the ACCJ.

Divider

Almost all large Japanese legal firms have registered foreign lawyers on their teams.