The Emergence of large law firms in Japan : impact on legal professional ethics
Contributor(s)Macquarie University. Dept. of Business Law
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AbstractThe profession of lawyers (bengoshi) in Japan has been characterised by the low numbers of practitioners and the non-existence of large law firms. However, recent years have seen the emergence of large commercial law firms as a result of mergers, substantial in-take of newly admitted bengoshi, and lateral hiring. This article explores the impact of such developments on legal professional ethics in Japan. The phenomenon of the emergence of large law firms will be discussed first, followed by a brief overview of the Japanese regulatory regime on bengoshi's ethics. The article will then analyse the new ethical risks using a framework of four of the six legal ethical norms identified by Hazard and Dondi: competence, loyalty to client, confidentiality, and independence. The Japanese legal education and training system have defects in nurturing candidates for a commercial law practice. In addition the large law firms' substantial in-take of newly admitted bengoshi puts in doubt the sustainability of their practice of in-house training to date, and raises concern about the issue of "competence". At the same time, as a result of the "consolidation" at the top end of the legal market and the largest firms' substantial expansion in size, the risk of conflict of interest becomes acute. Activated lateral movement aggravates the tension between the need for regular conflict-checking and disclosure and the duty of confidentiality. Individual bengoshi's professional independence in a large-firm setting is also a concern. The significant expansion in firm-size may lead to a "tournament-to-partnership", which has potential far-reaching implications on the large-firm bengoshi's ethical approach. Last but not least, there is also the potential risk that large law firms may exercise influence over the profession due to their significant proportion of membership in local bar associations.