Legal services in Japan: an interview with British Embassy counsellor
We spoke with Sophie Dyer, counsellor (trade policy) at the British Embassy Tokyo, about legal services in Japan and the British Embassy’s role in the Tokyo 2020 Olympics and Paralympics.
What brought you to Japan?
A role leading the UK’s trade policy team in Japan based at the British Embassy in Tokyo came up and I applied!
Having spent approximately a decade practising law, most recently in the UK government legal department’s Department of International Trade legal team, working overseas representing the UK during the EU exit transition seemed like a great opportunity.
It has not disappointed – I was part of the team that negotiated the UK-Japan Free Trade Agreement (FTA) and am currently leading Asia-Pacific (APAC) efforts on UK accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Being in Japan for the Olympics is also a bonus.
How have you seen the legal sector develop?
Possibly, because of geography, history and the language barrier, the Japanese legal market is quite different from those of other developed countries in APAC. The legal market is relatively closed.
However, there have been some legislative changes recently which make it slightly easier for UK-qualified lawyers to work in Japan (notwithstanding COVID!).
We hope that the push by Japanese officials, including the influential governor of Tokyo, to make Japan more attractive as a place of international – and not just Japanese – business will see the legal services market further expand.
How important are international legal services to Japan’s economy? How big a contribution have legal services made to Japan’s growth?
The provision of international legal services is important to Japan’s economy but there is room for growth. We know that Japanese big business really values the quality and service provided by overseas lawyers and often instructs foreign lawyers abroad.
However, it is fair to say that foreign lawyers are often not especially price competitive with Japanese lawyers.
This means that foreign legal services are less affordable to mid-size companies and even large companies only retain foreign lawyers where absolutely necessary, such as for international mergers and acquisitions (M&A), responding to foreign regulator subpoenas and international litigation, among others.
Where foreign lawyer representation would be helpful, but not essential, it is hard for companies – even the larger ones – to secure the necessary budget.
We would like to see the number of UK lawyers operating in Japan increase. Of the 436 people registered as Gaiben (a registered foreign lawyer in Japan) in April 2020, only 77 were UK qualified.
Not surprisingly, given the close links between the US and Japan, the US has 225, but this is still a relatively small number given the size of the Japanese economy.
We are working closely with the Law Society of England and Wales, Ministry of Justice and the Japanese government to ensure that UK lawyers are able to provide international legal services on a level playing field with Japanese qualified lawyers.
What is the legal sector like in Japan compared to the UK?
The UK legal services sector is dynamic, innovative and internationalised. English and Welsh lawyers are often the lawyers of choice for the provision of cross-border services overseas.
In contrast, although high quality, the Japanese legal market has not had a huge amount of competition – and as a result, arguably, the market has not had the drivers to innovate and internationalise in the same way.
Generally speaking, and possibly because of the relatively low number of lawyers per head of population in Japan compared to the UK, Japanese lawyers also tend to be more generalist – in contrast to the specialist UK lawyers operating in Japan.
What has the impact of the COVID-19 pandemic been on the legal sector in Japan?
Comparatively speaking, Japan has weathered the pandemic fairly well. Even during “state of emergencies” Japan did not “lock down” like the UK. Domestically, disruption to court sitting has caused some delays.
As with most sectors, there have been winners and losers.
Foreign firms have seen non-essential matters being postponed (M&As and internal investigations, for example).
On the other hand, capital markets and financial restructuring teams have been extremely busy during the pandemic as companies try to raise funds and restructure.
As with all markets, both working from home and border closures have resulted in an increased use of video conferencing!
How important is the UK-Japan CEPA?
Japan is a huge player internationally and an important political and economic ally to the UK. Negotiating an FTA remotely at pace was a huge achievement for both the UK and Japan.
The UK-Japan Comprehensive Economic Partnership Agreement (CEPA) provides certainty for UK companies operating in Japan and it supports trade and investment, which provides opportunity for UK lawyers. Cross-cutting rules in a number of areas, such as digital and data, are helpful for UK suppliers of legal services.
CEPA is also a stepping stone to UK membership of the CPTPP, which will open the doors to one of the largest free trading areas in the world and to economies that will drive global growth this century.
CPTPP sets modern rules governing trade in services, including key UK exports such as professional and business services, and financial services.
These modern rules remove barriers to market access and ensure UK services and service suppliers will be treated no less favourably than local services and service suppliers, as well as those from any other CPTPP member or third country.
Its professional services annex also encourages recognition of professional qualifications, which could allow UK businesses to expand into the APAC region and increase business opportunities in sectors such as legal services.
What role are foreign lawyers playing in meeting the needs of Japan’s society and the country’s growth? What opportunities are there for UK law firms in Japan?
Japanese foreign investment overseas is very significant. Over 1,000 Japanese companies sustain 185,000 UK jobs and the stock of Japan foreign direct investment in the UK was £90.5bn in 2019 (this is a 99% increase since 2016).
Foreign lawyers play a significant role in supporting Japanese business expansion and investment overseas.
In addition, recent legislative changes mean that there are more opportunities for foreign lawyers to engage in international arbitration.
What are the market access issues UK law firms could face?
Although recent amendments to the Foreign Lawyers Act 2020 have smoothed the process for foreign lawyer registration in Japan, significant bureaucratic processes remain.
This means that, in practice, Japanese qualified lawyers may face less restrictions (and are cheaper) than qualified UK lawyers.
We are working with our Japanese counterparts to ensure that businesses in Japan that require UK lawyers can access them as easily as they can access Japanese qualified lawyers.
Has the Tokyo Olympics and Paralympics brought in more business for legal services in Japan?
Any Olympics/Paralympics generate a large amount of business – however, I assume that (unfortunately) the difficulties caused by COVID-19 have meant that the Tokyo games have been particularly resource intensive for the legal sector.
We know of a number of UK business that won significant Olympic tenders, some of whom brought their UK legal advisors to Tokyo to finalise their partnerships.
Foreign lawyers also provide an important role looking after the Olympic and Paralympic athletes. For example, London-headquartered Hogan Lovells provides pro bono legal support to Paralympics GB.
What role has the British Embassy in Tokyo played during the Tokyo Olympics?
We have supported Team GB and Paralympics GB in their preparations for Tokyo 2020, which began over five years ago, identifying training locations and helping to introduce partners in Japan.
At this stage, we are helping with final arrangements for training camps and helping individual sports with specific issues.
We have also helped the organisers and Japanese authorities by passing on our experience of organising London 2012, with advice on everything from security through to how best to use the games as a catalyst for social change.
And of course, British companies have been involved in the Games’ delivery and the Department of International Trade has played a role in supporting their efforts to win business around Tokyo 2020.
What do you see as the most exciting aspects of Japan’s development in the next decade?
The biggest surprise to me on moving to Japan was the lack of digitalisation. Despite Japan’s high-tech image, cash is still king, and people often carry around a hanko stamp to sign contracts.
The pandemic has increased the pace of Japan’s digitalisation and the government is committed to driving forward this agenda at speed.
We are working to support Japan in its plans for digital transformation, sharing lessons from our 10 years of the Government Digital Service and exchanging views on key priorities, including digital identity and online delivery of government services.
We hope that the work of the new Digital Agency, which will launch in September 2021, could mean easier access to Japan's £2 billion annual public sector ICT procurement contracts for UK technology companies, which will require legal sector support!
Find out more about our work in Japan
We would like to thank counsellor Sophie Dyer and the British Embassy Tokyo for their contributions to this piece.
If you’re interested in our work in Japan, or need more information, email email@example.com