This article first appeared on November 7, 2017 in ALB Insights, a weekly, ad-free newsletter that is sent to subscribers. To purchase your subscription, please email Amantha at amantha.chia@thomsonreuters.com or call her at +65 6870 3917.

The Japan Federation of Bar Associations has been making a deliberate effort to decrease the number of new lawyers entering the Japanese legal market in order to increase quality. While this is expected to impact regional communities, reaction among the big Tokyo firms is decidedly mixed.

Japan can expect to see fewer newly minted lawyers this year, after 40 fewer people passed the annual bar examination compared to last year. The drop from 1,583 to 1,543, however, wasn’t as steep as the decline in the number of people taking the exam, which fell from 6,899 to 5,967, according to figures from the Ministry of Justice.

This is however not a simple reflection of the shrinking of the workforce in the world’s third-largest economy, which is losing more than half a million per year, according to statistics published earlier this year by the National Institute of Population and Social Security Research.  Instead, the drop in new lawyers available to the Japanese legal market, which is also extremely restrictive to foreign-qualified lawyers, was a conscious effort.

The Japan Federation of Bar Associations (JFBA) explained to ALB that the drop in the number of test takers was mostly due to a decrease in the number of law school graduates, which is turn was the result of a policy to tighten the admission quota for law schools to raise the quality of legal education, as well as stricter qualification criteria for graduation so that those who do graduate are of high quality.

And at least for now, the JFBA wants the decline to continue. “Taking account of the fact that the rise in the number of legal professionals has subsided to a certain degree last year and this year, the JFBA hopes that this trend will continue so that the total number of successful test takers will be around 1,500 quite soon,” it said.

MIXED REACTIONS

Not all in the industry agree with this initiative. One of them is Nishimura & Asahi, the largest law firm in the country, which believes that a better way is to focus on attracting more people to the legal profession instead.

“It is true that there is a common and persistent view in the Japanese bar that the number of those passing the bar exam should be decreased to reflect the lack of expansion in the legal business market. However, we believe that it is more important to focus on expanding the scope of lawyers’ business and increasing the attractiveness of the practice of law,” the firm told ALB. “We strongly expect that such measures will lead to more talented people aspiring to become legal professionals.”

But that view is not shared by Atsumi & Sakai. “We think that a decline in new young lawyers will not affect elite law firms such as ourselves since we only look at the best quality lawyers anyway,” says Hiroo Atsumi, managing partner of the firm. “Where it is likely to have an effect is at the in-house level, as there will likely be fewer candidates available for those roles,” he says.

However, he admits that smaller communities that need lawyers are likely to lose out on legal talent. “The new system of law schools and tests was designed in part to increase the number of lawyers in rural communities and I expect that these will be most affected by a decline in availability of lawyers,” Atsumi explains. “Some communities may have very few ones, or maybe no lawyers, which is not desirable.”

To contact the writer, please email john.kang@tr.com.