10 Asian Legal Business | January-February 2025 The Briefs With Japan relaxing foreign lawyer rules, international firms sense opportunities Despite its dynamic business environment and deep talent pool, Japan has faced criticism for maintaining relatively stringent registration requirements for foreign lawyers. These complex procedures have long been viewed as unnecessary barriers to entering the country’s $5 billion legal services market, drawing concerns from international law firms and practitioners. However, in July of last year, following recommendations from the Law Society of England and Wales, the Japanese Ministry of Justice took steps to address these concerns by introducing two key reforms. Under the new rules, law firms can now reuse employer-related documents for multiple applications, and previously registered foreign lawyers need only submit a simplified statement of past approvals instead of detailed employer verifications. These changes have notably eased the administrative burden on international law firms managing multiple registrations, and on foreign lawyers returning to Japanese practice. The regulatory changes mark a significant shift in Japan’s legal landscape, signalling a more welcoming approach to international legal expertise. One direct outcome of these reforms could be gradual increase in the number of U.S. and UK lawyers practicing in Japan. “This is a step toward making Japan more accessible for foreign lawyers and is indicative of a broader strategy to enhance collaboration between local and international legal sectors,” says Takeshi Nakao, managing partner at Magic Circle firm Freshfields in Japan. The timing of these reforms also coincides with several favourable market conditions. Notably, the depreciation of the yen has made Japanese companies more attractive targets for foreign acquisitions, leading to increased M&A activity. This development, coupled with Japanese Prime Minister Shigeru Ishiba’s economic policies focused on attracting foreign investment, is reshaping the Japanese legal market and creating new opportunities for international law firms, particularly in cross-border transactions and negotiations. In addition, the implementation of Japan’s Corporate Governance Code has further transformed the legal landscape. Japanese corporations are increasingly facing challenges similar to those in other sophisticated markets, including shareholder activism, unsolicited tender offers, and heightened scrutiny. “This change not only increases the demand for international legal expertise but also enhances the strategic role that foreign lawyers will play in domestic deals, together with bengoshis,” notes Nakao. While international law firms in Japan generally applaud the further liberalisation of the country’s legal market, the sector still faces certain limitations and challenges. National security considerations, for example, continue to restrict foreign lawyers’ involvement in strategic industry, requiring careful navigation of evolving regulations, according to Nakao. Although foreign law firms are now permitted to form joint ventures with Japanese firms, some international practices feel this change has limited impact. Jeremy White, global co-chair of M&A at Morrison Foerster in Tokyo, finds this change less relevant to global partnerships as they continue to operate under existing partnership structures. Looking ahead, despite challenges such as language barriers and cultural differences remain, the outlook for foreign lawyers in Japan appears optimistic in light of the new registration rules. The combination of regulatory reforms, supportive economic policies, and increasing cross-border business activity is likely to suggest continued growth opportunities for international law firms. “As barriers to entry are lowered for foreign lawyers, more firms will likely establish a presence in Japan, enhancing competition and collaboration within the legal sector,” says Freshfields’ Nakao. Morrison Foerster’s White, meanwhile, offers a more measured perspective. “We do not anticipate seeing many more international law firms come to Japan just because of the ongoing liberalisation,” says White. “The international firms will continue to increase market shares in a market which is overall growing. This fundamental shift is driven by increasingly sophisticated clients appreciating the value of high-quality legal advice.” However, to transform Japan into a more dynamic legal market, Nakao emphasises that further reforms are essential. He advocates for several vital improvements, including streamlining administrative processes, allowing flexible business structures, fostering an environment welcoming to international expertise, enhancing language support, and building stronger bridges between Japan’s legal community and global practitioners. “These changes,” Nakao suggests, “would not only attract top international legal talent but also help position Japan as a leading hub for cross-border legal services in Asia.”
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