Ryu Umezu, who managed Japanese firm Anderson Mori & Tomotsune (AMT) from 2012 to 2014, and recipient of the Managing Partner of the Year Award at the ALB Japan Law Awards in June, speaks to Kanishk Verghese about his former role, the firm’s recent expansion in Japan and abroad, and key growth areas for 2016.
ALB: What were some of your key objectives for Anderson Mori & Tomotsune during your time as managing partner of the firm?
Umezu: I tried to focus firstly on quality of service so that we could maintain our status as one of the highest quality law firms in Tokyo. While maintaining quality, I wanted to ensure that our firm offered services in all the major practice areas that large law firms should be covering. We are a big fullservice firm, but one area that was missing was in restructuring and insolvency. Last December we agreed to integrate our business with Bingham Tokyo, and about 50 of their lawyers joined our firm this April. Their insolvency and restructuring expertise enabled us to strengthen that side of the practice and become a truly full-service law firm.
The other aspect that I focused on heavily was to establish very strong financials for the firm. After the U.S. financial crisis, many law firms all over the world declined in business. We did experience a slight decline, but because we did not rely solely on transactions, the level of decline we experienced was small. However, because we were hiring more people and paying a high rent, our cost structure was a little weak when I took over in 2012. We reviewed every aspect of our firm’s spending and reduced our costs significantly during my three year term. The major step was when we moved our office two years ago from Roppongi to Akasaka. The new office is in a new building which is very clean and efficient, but very modest and simple. We’ve reviewed some other spending, and we are now very financially strong.
There are two major objectives to establish strong financials. Firstly, we aim to provide the highest quality of services with reasonable fees. Our rates are relatively low and we have not modified our hourly rates for more than five years. Secondly, we want to provide a stable work place for our partners, attorneys and staff, to attract the highest quality people. We want to keep them happy and to achieve a lower turnover which is essential to maintaining our quality.
ALB: Are there any practice areas that have been particularly lucrative for the firm in recent years? Which sectors do you consider to be key growth areas for 2016?
Umezu: One area we are looking at in terms of growth would be M&A work. The types of M&A transactions have varied quite a lot over the past few years. The reason we wanted to grow our insolvency team was that some companies are doing M&A transactions with failed businesses or restructuring earlier than the actual filing of insolvency. As a result, court insolvency procedures are declining in number, but there have been more restructuring, business sales and preinsolvency stage M&A transactions. With the addition of the Bingham team, we now have better capabilities in advising on these transactions. The AMT partners and former Bingham partners are working together on some major transactions, so the integration has been really good for us.
Our energy and infrastructure work too has grown quite significantly. A major reason for that is that Japan introduced certain feed-in tariffs in the renewable energy sector. There have been a lot of solar projects in Japan, and we represent many of the major developers and banks on those projects.
Our real estate and capital markets are also areas where we have been successful for a long time. Japanese Real Estate Investment Trusts (J-REITs) transactions are very active, and we advise on many of these transactions. I expect the real estate sector to continue to be active, especially with a lot of non-Japanese investors coming into the market in certain industries like hotels and logistics.
Furthermore, the debt market has been quite active for two reasons. Firstly, the low exchange rate of the Japanese yen is attracting a lot of non-Japanese issuances of yen-denominated bonds, or ‘Samurai Bonds’. AMT advises on a dominant majority of Samurai Bonds transactions in terms of issue amount. The second reason is that Japanese individuals are eager to invest in dollar-denominated notes, as well as currencies of developing countries. There is a lot of demand, and we represent many of these issuers, mostly U.S., European or Australian banks, on the issuance of these notes here in Japan. I think we will continue to see a lot of activity in this area for the rest of this year and next year.
ALB: After launching offices in Singapore and Shanghai in 2013, Anderson Mori opened in Ho Chi Minh City and established a Jakarta desk in the office of Roosdiono & Partners this year. How do these new offices fit into the firm’s strategy?
Umezu: We are a little behind other big Japanese firms in growing our Asian practice, but we have a firm policy to establish offices only once we have quality partners who can develop the practice with sufficient skills and local connections in a certain region. Furthermore, if you look at our China practice, we have had a Beijing office for more than 20 years, and we have recently opened in Shanghai. We initially wanted to serve Japanese clients doing business in China, but eventually through our Beijing office we acquired major Chinese companies as clients for capital market transactions in Japan. Many major banks and major life insurers did IPOs in Hong Kong with share offers in Japan. We represented the issuers, and sometimes the underwriters, on the Japan portion of those offerings. We want to do the same thing in Asia with our new offices – to not only serve Japanese clients abroad, but to seek out local clients who may engage in capital markets and other transactions in Japan. That is our strategy and we will ultimately look to hire local partners and enter the domestic market like a local law firm. That is our ultimate goal, but that may not happen in the immediate future.
ALB: Does the firm have any further plans for expansion either in Japan or overseas?
Umezu: We are carefully studying opportunities in some other Asian countries like Thailand and Myanmar, but we are yet to make any firm decision on opening new offices. But as mentioned, if we can locate skilful partners, we will seek out opportunities to establish an office. If we were relying on mostly Japanese clients, I think opening many offices would be very important, but historically we have been advising global clients while still developing Japanese clients. So, I think the balance of our clients is good and we always look at both Japanese and global clients when constructing our strategy. In Japan, we have offices in Tokyo and Nagoya for now, but we don’t have any immediate plans to open additional domestic offices.
ALB: The legal landscape in Asia has become more competitive in recent years as both international firms and local firms beef up their presence in the region. Given Anderson Mori’s recent overseas expansion, does this pose a major challenge for the firm?
Umezu: At the moment, we don’t experience much competition in Asia because our offices outside Japan are relatively small with low costs. However, if we expand our operations in Asia and start to consider hiring local partners, we would need to think about how to withstand the competition. Some of our strengths are that we are in a very strong financial position and we have skills in managing a law firm with low costs. I recognise that some U.S., UK and major global firms are very good, but their costs are also quite high. I expect that we can be very competitive in providing reasonable fees with very good quality.
ALB: What is your outlook for the year ahead, especially with the weak yen and uncertainty over the economy?
Umezu: Regardless of the value of the yen, good Japanese companies will seek to expand outside of Japan. The other aspect is that the weaker yen could generate more inbound work including M&A, property acquisitions, infrastructure investment and energy investment. We are always looking at both outbound and inbound work, but we can deal with any sort of economic changes. We are optimistic for the years to come.
