I recently had the opportunity to spend time in Tokyo meeting with managing partners and senior lawyers from small, medium-sized and large law firms. Some were from domestic firms and others from international overseas-based firms with offices in Tokyo.
What I came away with was a good understanding of the immense opportunity the Japanese economy currently presents domestic Japanese lawyers with international practices, as well as entrepreneurial lawyers from around the world who can work collaboratively with lawyers in Japan to assist Japanese corporations from a variety of sectors in their current drive to expand overseas.
After two decades of recession, Japanese companies are highly motivated to break out from deflation and anaemic domestic economic growth. Therefore, to meet the needs of their clients and prospective clients, internationalisation and regionalization is a high priority for both small as well as large Japanese law firms.
Japan’s recent economic history, the catalyst behind internationalization
The third largest economy in the world behind the United States and China, Japan possesses 13.7% of the world’s private financial assets (the 2nd largest in the world) at an estimated $14.6 trillion. As of 2011, 68 of the Fortune 500 companies are based in Japan. Indeed, The economy of Tokyo is the largest metropolitan economy in the world. For three decades from 1960, Japan experienced rapid economic growth. Since then, however, growth has averaged 1.5%, slower than growth in other major developed economies, giving rise to the current drive for economic opportunity overseas. The recent tragic events of the Japanese earthquake and tsunami accelerated this drive for growth, including government action to lift limitations on domestic mergers and acquisitions, a key to both domestic and international corporate growth.
Sectors seeking international growth
Healthcare, construction, energy and retail are among some of the specific corporate sectors in Japan that are actively seeking more cross-border activity this year and into the future. I met not only with lawyers while in Tokyo but also senior corporate leaders who are actively seeking high-level legal and management consulting assistance in markets as diverse as the US, South America, the Middle East and the European Union.
What are law firms doing?
Indeed, in a bid to secure not only opportunity for themselves but also for their domestic clients, law firms like Nishimura & Asahi, one of the country’s 4 largest law firms, has launched international offices in China, Singapore and Vietnam since 2010.
An example of what’s possible
As Asian Legal Business reported last year, DLA Piper, Milbank and Arnold & Porter all won roles on a landmark Japanese-Latin America outbound deal. The deal saw a consortium of Japanese financial institutions invest $1.5 billion in Venezuela’s national oil company, Petroleos de Venezuela (PDVSA). DLA Piper acted for the consortium which included The Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance (NEXI)—Japan’s government-owned financial insurance institution—as well as commercial bank lenders.
Firms large and small can participate
In my discussions with the managing partners of a series of small law firms in Tokyo, there is a strong desire for tie-ups with overseas firms throughout the world, formal or informal. These alliances would permit these firms to more successfully assist their clients and prospective clients secure opportunities for overseas growth such as the one I’ve just mentioned.
These opportunities are by no means reserved for large international law firms with offices in Japan or large international corporations, however. There are a plethora of opportunities as a result of the increased desire among smaller Japanese corporates for international growth.
What should law firms in Japan and outside of Japan be doing to capitalize on this opportunity?
- Forge international relationships
First and foremost in the mind of any foreign law firm seeking to assist Japanese corporations secure opportunity in your domestic market – is to identify ideal potential referral partners among Japanese law firms, whether small or large, and reach out with an aim to securing a discussion about developing a joint business development initiative.
In particular, firms with corporate, energy, government contracts and construction practices are very well placed to forge lucrative relationships with Japanese law firms. Japanese law firms, large and small, from my observation of the market, should do the same in reverse. If you’re an international law firm with offices already in Japan, create a dedicated internal business development initiative around this opportunity, focused on generating specific opportunities for presentation to your existing Japanese client base, and prospective new Japanese clients.
- Become more easily found via social media
In addition and as important – make yourselves more visible on international social media platforms. It is a very efficient way in which to be found by overseas law firms and prospective clients. For example, as a nation, Japan is active on Twitter and less active on Facebook- but like the legal profession outside of Japan, Japanese lawyers appear to be not nearly as active on social media as the general population.
I was not able to find a domestic Japanese law firm with a dedicated presence in the blogosphere. I believe strongly if someone steps to the plate in Japan as the first Japanese blogging law firm (unless there is one that I couldn’t find), they will place themselves on the international map as perhaps the “go-to” law firm in Japan for both overseas lawyers and prospective clients. Some examples of law blogs dedicated to North Asian regional economies include China Law Blog and Korea Law Today. Certainly both are worth emulating.
A large number of companies in the third largest economy in the world are now actively seeking international opportunity. Those lawyers with the entrepreneurial drive to forge avenues to assist these market participants secure opportunity will, over time, find themselves with a new client base among Japan’s increasingly internationally-focused corporate sector.