Global Economics

Japan: Lawyers Wanted. Really


Remember this old chestnut? If you were to lay all of America's lawyers end-to-end on the equator...it would be best to leave them there. Well, it now appears that Japan might have room for them instead. After decades of enjoying one of the world's smallest concentrations of attorneys, the country is embarking on a program to mint thousands of new ones every year.

For much of the postwar era, Japan didn't feel it needed many lawyers. That worked in a consensus-driven society bent on economic growth. Court battles in Japan were always a last resort and considered very bad form. Today, with patent disputes and cross-border mergers on the rise, the nation is discovering that legal sharpies actually come in handy when settling disagreements. But with just 22,000 licensed attorneys, compared with more than a million in the U.S., ``it's extremely difficult to get talented lawyers [in Japan],'' says Stephen Bohrer, an American who heads cross-border transactions at Nishimura & Partners, a big Tokyo law firm.

Japan's legal community finally seems to be getting serious about easing the shortage. In 2004 the government for the first time allowed universities to begin offering graduate programs in law. Since then 74 new law schools have opened their doors, with the first graduating classes -- some 3,000 students -- to hit the streets this spring. Prior to the shift, Japan's sole graduate-level legal program was a two-year course of study sponsored by the Supreme Court -- but it was only offered to those who managed to pass the bar exam first. And only 1,000 to 1,500, or about 3% of those who sit for the test, were allowed to pass annually. That meant most candidates took the bar exam at least five times before they passed -- or gave up.

Tokyo is doing its best to make the new schools attractive. This year the bar results will be weighted so that about a third of grads pass, leaving just 500 spots for the 40,000 or so exam takers who didn't attend one of the new programs. By 2010 the government plans to double the number of test takers allowed to pass the exam, to about 3,000, with most of the increase going to grads of the new schools. ``Law school has expanded my possibilities,'' says 30-year-old Yoko Mukai, who signed up for a $15,000, two-year course at the University of Tokyo School of Law after failing the bar several times in the past.

MERGER MAVENS What will Japan do with all its new lawyers? Given that the economy is growing at its fastest clip in years, demand for savvy merger attorneys is surging. And Japanese companies are turning to the legal system to settle disputes that once might have been worked out in back rooms. In 2004, for example, Sumitomo Trust & Banking and Mitsubishi Tokyo Financial Group faced off in court after UFJ Holdings pulled out of a planned deal with Sumitomo and merged with MTFG instead. ``In the past [such a court battle] would never have happened,'' says Masatomo Suzuki, a partner in Tokyo with Cleveland-based law firm Jones Day.

With so many new schools starting all at once, growing pains are inevitable. One concern is finding enough qualified professors. And some fret that it might not be fair to give law school grads a leg up on the bar exam. ``Everyone is watching closely to see what kind of people they'll churn out,'' says Robin Doenicke, a partner at Zensho Consulting Group, a legal search firm in Tokyo.

Despite the changes, it's unlikely Japan will ever fully embrace the kind of legal conflict common in the U.S. Litigation is messy and flies in the face of Japan's cultural preference for harmony. But a more sophisticated, and contentious, legal system may be just what the country needs in order to keep its economic overhaul on track. And that means tolerating unseemly courtroom brawls that once might have shocked.


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