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A narrowing divide

A narrowing divide

The Japanese legal tradition is evolving, and for some Australian lawyers, being at the cusp of the evolution is proving a valuable challenge, writes

The Japanese legal tradition is evolving, and for some Australian lawyers, being at the cusp of the evolution is proving a valuable challenge, writes Angela Priestley

Kevin Rudd made headlines at the beginning of his tenure as prime minister when he omitted Japan from his first overseas trip in the top spot. Had Rudd overlooked the importance of Japan as Australia's largest export market? Probably not. But his lack of presence in the region did stress the relationship, and possibly failed to recognise the region for what it is: a lynchpin of investment that has backed the economic development of Australia for decades.

Australian lawyers working in and out of Japan know all too well the power of the region. In 2008, Japan's acquisitions in Australia totalled $7.5 billion, according to Thomson Reuters.

For the Australian lawyers undertaking such work as well as foreign law in Japan, the differences between Civil and Commonwealth law will only be the initial challenge to completing deals. The Japanese culture and lifestyle will also step in, especially a silent but incredibly powerful hierarchy of leadership that will require all elements of sign-off, as well as an engrained formal business culture that must be addressed.

Bob Seidler, now a partner at Blake Dawson, was the first Australian to be qualified to practise foreign law in Japan. He knows the challenges of business and legal work in the region, but developed a fondness for the place that ended with him making Japan home, and later working as CEO of Hunter Phillip Japan Limited, an affiliate of Blake Dawson.

His first big deal as a young lawyer happened to be in Japan in the early 1970s. It also happened to be the first international aircraft financing ever completed in Japan - on behalf of Qantas. Seidler notes two memorable experiences from his early days doing business in the region: "Firstly, when I got on the plane there was an article in the JAL magazine on the ten commandments of doing business in Japan. I read them and when I got to seven, threw the magazine away because I had broken every one of them," he says.

"The second was when I came back from Japan, and I said 'I've been there twice, my first time, and my last time'."

Japan was a daunting place, says Seidler. The cities were of a scale unheard of at the time in Australia, the population was exploding and there was little to no English spoken.

Despite all that, Seidler was determined to be the first Australian to practise foreign law in Japan. It took 18 months to get accredited - a process he describes as incredibly painful due to the level of bureaucracy involved.

At the Tokyo office of Baker & McKenzie, managing partner Jeremy Pitts works primarily in finance, dealing with inbound work from foreign investors. Pitts says his foreign clients learn very quickly some of the differences in undertaking legal work in Japan - particularly the role of government, which is much more involved in day-to-day business than what might be expected in Australia.

"In Japan, the laws are also a little vaguer," he says. "It's not as clear what you can and can't do, so you end up spending a lot more time talking to government. You spend more time talking between the regulated institutions and government."

During his 21 years in Japan, Pitts says he has seen the economy jump from bubble to burst a number of times, while also playing witness to the changing role of the legal sector in Japanese business. "Last time I checked, there were around 20,000 lawyers in Japan," he says. "It's a tiny number when you compare it to the size of the country - a population of 125 million."

Given that the ratio of lawyers to population is tiny, Pitts says lawyers have typically played a role of trusted advisor to organisations, rather than operating across the myriad of legal work that might be expected of an in-house lawyer in Australia. It's a culture that's changing, says Pitts, particularly with the liberalisation of admission rules for lawyers.

For Pitts the quirks of practising law in Japan are second nature. But for second-year lawyer Rachel McNaught, in Japan for three months as part of the Baker & McKenzie's Asia Pacific secondment program, things are still a little new.

She says language has been a slight barrier, even though she has studied Japanese extensively. Yet after spending just a month in the Tokyo office, she is getting accustomed to the work and learning the ins and outs of the formal business culture. "Now that I've found my feet and people know that I'm here, I'm getting more in-depth work coming in and getting more heavily involved in some of the deals now," she says.

Having just advised the Babcock & Brown Japan Property Trust on a recent deal to break free from Babcock & Brown in Japan, Freehills partner Justin O'Farrell, too, has adjusted to some of the more interesting facets of undertaking legal work in and out of Japan.

He points to the hierarchy involved in dealing with people as being particularly unfamiliar. "There is a lot of respect for position. People are very polite, they need to talk about the issues a lot," he says.

"They need to meet, consider [advice] in detail and get comfortable with things. There is more of that than there is in Australia. The Australian style is to deal with the issues very directly, whereas in Japan the issues are allowed to evolve and crystallise over time."

In dealing with Japanese tax requirements to complete the deal, O'Farrell says his team found them to be governed more by practice and usage than their prescription. "We were finding ourselves in a situation where the rules were somewhat amorphous, but strictly applied," he says. "Again the over-arching principle was making sure we were doing the right thing against previous examples, with the measurement often being against broad principles and gut-feel."

Kevin Rudd eventually did make it Japan, and rightly so. Despite the emerging influence of China, Japan is still clearly a valuable and strategic partner - the legal challenges will continue to build in the future and bridging the gaps between two very different legal traditions will continue to open opportunities for Australian lawyers.

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