Despite the current storminess of Japan-United States trade relations, prospects for cooperation between the legal professions in the two countries have never looked better. Yesterday a historic agreement became effective, permitting US lawyers to practice on a limited basis in Japan for the first time since World War II.
California and New York attorneys are elated, particularly those who have large investment banking firms, corporations, and insurance companies as clients.
As many as two dozen blue-chip law firms plan to open regional branches in Tokyo.
``The primary advantage is that it will give American firms the opportunity to have American-trained lawyers in place to serve clients in Japan,'' says Steve Nelson, an American Bar Association (ABA) official who had a hand in developing the pact. Mr. Nelson is with the Minneapolis law firm of Dorsey & Whitney.
``The Wall Street firms are likely to be in there first to service investment banking. As the Japanese move their own economy offshore, with the yen as high as it is, California firms will want to be there to increase the ability to work with Japanese clients on American investments,'' Nelson said.
A bit of Japanese legal history is needed to understand the excitement in some circles that followed the announcement Feb. 27 of US Trade Representative Clayton Yeutter that foreign legal advisers can practice in Japan.
Before World War II the Japanese legal profession was regulated by the national Ministry of Justice. But in 1949, with Japan occupied by American forces, legislation was passed creating Nichibenren, the Japanese Federation of Bar Associations, as a self-regulatory body independent of the government. This is similar to the relationship between the US government and the ABA.
As long as the US ruled Japan, some foreigners were allowed to belong to Nichibenren. But in 1955, three years after the occupation ended, legislation was passed to keep foreigners out of Nichibenren with the exception of a few US lawyers who were already members.
In the more than 30 years since the law was passed, only one foreigner is known to have been admitted to the Japanese bar - a Korean raised and educated in Japan.
Until the new agreement was reached, US companies wanting to do business in Japan had to, for the most part, hire Japanese lawyers to do the job. Now it will be possible for the American companies to use their own counsel.
Under the agreement, US attorneys wishing to practice in Japan must certify to the Japanese government that they have practiced law for five years and that they are proficient in the laws of other states besides the ones that licensed them.
The arrangement is reciprocal: US attorneys interested in being licensed in Japan must practice before the bar of one of only a half dozen states where supreme courts have given the nod to foreign legal consultants. California, New York, the District of Columbia, Michigan, Texas, and Hawaii are licensed under the agreement.
The only apparent US losers under the new arrangement are a number of young US attorneys who went to Japan as trainees of Japanese law firms. Called ronin, after Japanese samurai warriors who had no masters, these trainees, unaffiliated with any US law firms, will not qualify for licensing because their experience practicing law in Japan does not count toward the total five years' experience required by the Japanese.
For more than a decade the ABA, individual attorneys, Congress, the State Department, and the US trade representative's office have made sporadic overtures - but never jointly - to Japan, suggesting an opening in the legal services market.
But Nichibenren fiercely resisted, ``because they were afraid they'd be overrun,'' said Roger Rosendahl, another ABA official instrumental in forging the pact. Mr. Rosendahl is a partner in the Los Angeles office of Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey, another firm with plans to open a Japanese branch.
Last May the Japanese Diet passed legislation authorizing in principle the licensing of foreign legal consultants. But many US lawyers considered the bill worthless because so many restrictions were attached. After months of negotiation, a breakthrough occured in December, says Rosendahl, when the ABA threatened to file a petition accusing the Japanese of unfair trade practices.
That, combined with achieving a consensus between varied American groups involved and getting Congress ``into the act,'' says Rosendahl, made the agreement possible. He predicts it will make ``Tokyo an international financial center replacing London as No. 2 in the world.''