17 ASIAN LEGAL BUSINESS – DECEMBER 2023 WWW.LEGALBUSINESSONLINE.COM COVER STORY A huge amount of dry powder combined with next-to-growth at home meant that despite a weaker yen, Japan’s corporates sought returns overseas, and the country’s law firms expanded internationally just as aggressively. Large and mid-size firms also hired international lawyers to compete for inbound legal work, creating more competition for foreign law firms in the country. Japanese companies, like others around the world, have been rethinking their China strategy in the last year, with investments slowly moving out of the PRC and moving increasingly into Europe and Southeast Asia. And lawyers are following their clients around the world, says Tony Andriotis, the head of DLA Piper’s international arbitration practice in Japan. Anderson Mori & Tomotsune opened a second European office in Brussels in October, following a London launch last year. Mori Hamada & Matsumoto has announced plans to open a New York outpost, following in the footsteps of Nishimura & Asahi and Nagashima Ohno & Tsunematsu. And TMI Associates opened a second European office in Paris to go with its London outpost. Even a relatively newer law firm like Miura & Partners has been expanding aggressively, announcing international office launches in Jakarta, London and San Francisco with plans to open in Ho Chi Minh City in 2024. A lot of the focus has been Southeast Asia, says Andriotis. Japanese clients and law firms have had longstanding and stable relationships in Southeast Asia as a result of which the region naturally becomes the recipient of outbound business from Japan, he explains. This only grew in 2023, as Nagashima Ohno also established a Jakarta presence, and Anderson Mori set up shop in Hanoi; it had already launched an HCMC presence in 2015. Domestically, clients have also gotten a lot more sophisticated, leading to the demand for niche legal services and an increased sese of competition in the Japanese legal market, says Andriotis. “Now they’re actually making much more careful decisions on which law firms hire. The sophistication of clients has led to more competition in the domestic market. The clients are now much more familiar with international standards and are already familiar with their local market. While the significance of relationships has not gone away, if a smaller or boutique firm can show quality and cost-effectiveness, clients may be more inclined to work with them,” explains Andriotis. This has led to the emergence of a larger market for mid-size, small, and boutique firms in the country, which can now compete for work with the six largest firms. Post-pandemic Japan is a symbol of slow, stable and real growth, prompting global investors to consider the country a stable investment destination. While global inbound work goes primarily to foreign law firms with a presence in the country, local firms have revamped their structures to capture a part of this inbound market. Nishimura & Asahi became the second major Japanese law firm to allow foreign lawyers to become full equity partners, after Anderson Mori in 2021. “Japanese law firms are hiring more international lawyers so that they can handle inbound legal work and represent Japanese companies abroad on their own and compete with international law firms that clients tend to otherwise rope in,” adds Andriotis. The key to this is also that Japan, unlike some firms in South Korea, has not “Americanised” its partner rates, even for its international partners based in Tokyo. Firms in Japan still offer a considerable discount on lawyer fees even to foreign clients, as compared to global counterparts with a Japan office, Andriotis explains. Lastly, Andriotis also points out that Japanese law firms are becoming more aware of the importance of brand recognition and are “embracing a more international model of marketing.” Firms are hiring more marketing professionals, and partners are seeing a lot more cooperation with marketing teams. “You’re seeing real growth and appreciation of this kind of branding,” he says. — ND global law firms to maintain a lean and nimble structure, lateral hirings have been occurring, particularly in strategic areas. For instance, London-headquartered Watson Farley & Williams made three partner hires to its dispute resolution practice. U.S. firm Baker Botts, meanwhile, raided the UK’s Ashurst for three partners specialising in energy and infrastructure projects since setting foot in Singapore last year. “Certain international law firms are intensifying their focus on energy and infrastructure projects partners with the aim of capitalising on the surge in work in Singapore and the Asia-Pacific region. They are counting on this practice to bolster the firm financially as they navigate through challenging times. Because apart from transactional commercial work on a retained basis, there hasn’t been as much work from maybe June onwards,” says Linus Choo, regional executive director at Ethos BeathChapman, an executive recruitment agency. Amidst this tricky economic climate, general disputes has been another key practice sustaining law firms across the board, according to Choo. Coinciding with that observation, waves of new dispute and arbitration boutiques set up by former star partners at big domestic outlets have been making their presence felt in JAPAN: OUTWARD BOUND
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