Japanese law firms are now becoming a global force to be reckoned with. While most Big Four firms already have a strong presence in other Asian countries, including many locations within the ASEAN region, others are looking even further afield. Nishimura & Asahi, Japan’s largest law firm, already has offices in Germany and the U.S., while Anderson Mori & Tomotsune and Nagashima Ohno & Tsunematsu have outposts in London and New York, respectively.
Even outside the Big Four, firms are not shy about their overseas ambitions. In March, TMI Associates set up shop in Paris, while Miura & Partners announced new offices in London and San Francisco, aspiring to be a “global partner” for their clients.
Masayuki Atsumi, a partner at Miura & Partners, tells ALB that his firm’s long-term is to become a “truly international law firm”. In addition, Ken Shimono, a partner at TMI Associates, would like to see his firm to grow in size and capacity to compete with the established U.S. and UK firms in overseas markets.
These overseas forays launched by Japanese domestic legal giants might have been backed by strategic visions, ample resources, and qualified talents. But they could also face multiple challenges beginning with the most basic one, that they do not appear as “international” in the way major UK and U.S. law firms are.
Isaac Uchiyama, head of business development and operations at EY Law Japan, perceives an uphill battle for these Japanese outlets to have the same impact as their Western-headquartered counterparts in foreign markets.
“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. Therefore, firms with names that sound traditionally British or American don’t look out of place and are not assumed to have limited capability in a global legal marketplace,” explains Uchiyama.
“However, a Japanese firm with a distinctly Japanese name will not easily conjure the assumption that it has international capability as a law firm even if they have a U.S., UK or local law qualified lawyer in their new market office,” he adds, which is the case of many internationally expanding Japanese firms.
For instance, Miura & Partners’ U.S. operations are headed by corporate partner Naomi Koshi, a Harvard graduate admitted in both New York and California. Atsumi, who is qualified as a solicitor in England & Wales, is co-leading the firm’s UK office.
While the problem of perception could considerably hinder some Japanese firms’ overseas expansions, one other issue is the deepening mismatch between a ballooning vision and a tightening budget.
“An international law firm has ‘full-service capability’ on the ground in the foreign jurisdiction. This means, for example, in Japan, there is a team of locally qualified lawyers in addition to Japanese bengoshi (lawyer) and maybe a UK or U.S.-qualified lawyer as well. Such an investment in necessary talent to sincerely provide ‘full-service’ in a foreign location is very expensive for what is likely regarded back home in Japan by at least some of the partnership as a loss-making enterprise,” explains Uchiyama.
But he emphasizes the importance of local talent to help Japanese firms have an impact.
“A bench of local law-qualified talent will be needed in order to generate fees out of the expansion office to cover local overhead and move beyond just being an outpost or feeder office. With this comes the need to address the operational language and cultural structure of the Japanese firm which needs to centrally communicate out of a Japanese headquarter while developing an ‘international standard’ for a majority Japanese language- and culturally based staff,” says Uchiyama, while cautioning that firm management may question the necessity to alter the culture of the many to include the few.
But even with the necessary on-the-ground expertise, the global vision of these Japanese law firms is difficult to be realized, especially when they are going head-to-head with the resourceful Western outfits on their home turf.
“One challenge would be in doing the business development and relationship building with non-Japanese targets and clients in the overseas location. These corporate entities often have well-embedded international law firms advising them around the world, and the firms are more than likely already established in Japan. This is a hard space to break into,” says Uchiyama.
He is convinced that investment in business development and marketing services is critical for these Japanese firms to punch above their weight. And the “clients-come-to-me” attitude staunchly held by many senior Japanese partners is now likely doomed to fail.
“While this may apply in a domestically oriented practice, overseas expansion is a whole new ball game in an entirely different league,” says Uchiyama.