The World Is Not Flat
A global corporation with a panel of global law firms might be the way to go for dealing with an increasingly globalizing legal services market. However, although 45 % of the $600 billion turnover global legal services market in 2014 is in the Americas and a further 30 % in Europe, growth markets are in emerging economies in the Asia-Pacific and Middle Eastern regions, according to MarketLine.[57] This trend creates new demand for corporate legal services, for example to facilitate South-South trade and investment (e.g.
Chinese companies investing in Africa). Even before the current phase of globalization, the world has been far from flat, due to the persistence of nationally based jurisdictions with the license to practice law given at the national (or subnational state) level. Added to this is national difference in the way lawyers are treated when they go in-house to work for business corporations. A brief account of Japan, a major industrial nation, illustrates this point.[58]Japanese corporations, many with global presence, of course have in-house legal departments, but they are not staffed by qualified lawyers. The in-house legal department staff may have studied law at top universities, but they have never practiced law, not passed a bar exam, nor admitted to the bar. Just a handful of corporations have a qualified lawyer heading the legal department. A career in a corporate legal department is considered a life-long job, on a par with any other white-collar lifetime employment jobs in large corporations. Legal training necessary to be able to draft contract documents and to comply with government regulation, has been provided largely on-the-job in-house. One consequence of this system is that legal department staff have a deep understanding of the business of their employer.
There is, however, wind of change in Japanese legal departments, due to both demand-side and supply-side reasons.
On the demand side, Japanese corporations have realized that they need to better manage their risk and reputation, and some major corporations have increased the size of their legal departments significantly to enforce compliance, in some cases following a corporate scandal or mismanagement. From the supply side, there have been pressures to make the legal system serve societal needs better, for example by reducing the time to get a case heard. This led to reforms in legal education, creating law schools and increasing the number of those who pass the bar exam, with a recent figure of just over 36,000 admitted to the bar. This is still a relatively low number in a country with a population of 120 million. Nevertheless, an increase in the flow of qualified lawyers has led to an addition to the core career aspiration of freshly minted lawyers, to become a judge or a partner in a law firm, in the form of becoming a company lawyer.The legal education reform therefore began to impact corporate legal departments gradually. First, a trickle of qualified attorneys went in-house, mostly for the Tokyo offices of foreign banks and subsidiaries of foreign multinationals such as IBM and GE. More recently, an accelerating flow of qualified lawyers choosing to join business corporations meant a thirteen-fold increase in in-house lawyers during 2005 and 2016. But the total number of lawyers who work in-house remains low, at just over 1000 in 2014, according to the Japanese Bar Association. Lawyers used to have to seek permission to go in-house from its professional association until 2004, but this permission system was changed to a notification and registration system more recently.
Today, major Japanese corporations and trading companies thus have a legal department whose head came through the old system of internal training and promotion, with a small number of younger qualified lawyers. The jury is still out on how the balance between non-lawyers and lawyers will pan out in the future. There appears to be no consensus yet among Japanese legal department heads on how best to use the newly available legal knowledge and expertise of qualified lawyers in-house. But in a work environment in which legal department work is carried out by both lawyers and non-lawyers, it surely concentrates our mind on what it is that only qualified lawyers can do, or permitted to do, in corporate legal services.
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