*http://www.asahi.com/english/Herald-asahi/TKY200707070110.html
Size matters BY YUICHIRO MASUMITSU THE ASAHI SHIMBUN* As mergers and acquisitions transform the corporate landscape in Japan, so, too, is the world of corporate law undergoing a major makeover. Law firms here are increasingly taking on a bigger presence to cope with the influx of cross-border and other deals that are being made. For example, the nation's largest law firm came into being last Sunday when Nishimura & Partners and Asahi Law Offices' international division merged to create Nishimura & Asahi. The firm has 327 lawyers. Increasingly, size matters when it comes to sorting through an ever-complex legal maze brought on by mergers, takeovers and other attempts at corporate realignment. To help their clients cope with M&A attempts, law firms sometimes must assemble a large team of lawyers specializing in different areas. "Law firms have no choice but to expand the scale of their operations so that they have a sufficient number of experts in various fields," said Masatake Yone, a partner in the law firm Mori Hamada & Matsumoto, which had 223 lawyers as of the end of May. In 2005, Mori Hamada & Matsumoto merged with Max Law Offices to form the current entity. Mori Hamada & Matsumoto was created through a 2002 merger of Mori Sogo and Hamada & Matsumoto offices. >From clients' point of view, the size and clout of a law firm can make all the difference in battles against hostile takeovers or in acquisitions. "The success or failure of an M&A depends upon the power of the 'mercenaries' that a company can employ," says a corporate legal officer. Indeed, when companies engage in a takeover battle, major law firms often clash as proxies of either side. Such rivalry was evident in the June 24 shareholders meeting of Bull-Dog Sauce Co., which is trying to ward off a takeover bid from Steel Partners Japan. Representing the U.S. investment fund, Yoshimasa Furuta, a partner in Anderson Mori & Tomotsune, fired a barrage of questions at the Bull-Dog management. "Wouldn't it make more sense to spend the funds required for anti-takeover measures on your core business instead?" Furuta asked at one point. Whenever a question was raised, Bull-Dog President Shoko Ikeda would not respond until she had gotten advice from Masakazu Iwakura, a partner of Nishimura & Partners, who was seated behind her. It was during the June 24 meeting that the Kobe-based sauce producer won shareholders' approval to introduce a "poison pill" defense measure. Major law firms will play a greater role in helping businesses involved in M&A deals as such deals take on greater importance in years to come. In fact, M&As are at a record level in Japan, with 2,775 such deals in fiscal 2006, according to Recof Corp., which monitors, mediates and advises on such developments. The figure is about a 4.5-fold increase from 10 years earlier. A team of several dozen lawyers is needed in cases worth 1 trillion yen or more, according to industry insiders. Inevitably, law firms are becoming larger so they can take on the new business. This primarily explains the current wave of reorganization among law firms. While Japan's new largest law firm has 327 lawyers, its size is relatively puny compared to some outfits in the United States and Europe, which have more than 1,000. "There's still a lot of room for further expansion for Japanese law firms," says Akira Kawamura, a partner of Anderson Mori & Tomotsune. Kawamura currently serves as secretary-general of the International Bar Association. The idea that legal services for corporate clients are a "growth industry" prompted Tomoyuki Oka to join Anderson Mori & Tomotsune last fall. "The job requires speedy interaction with clients and offers a chance to be involved in a big business project," the 26-year-old lawyer says. Besides the professional satisfaction that can be expected from being part of a major organization, many lawyers are attracted by a stable and sizable income that can often prove elusive when practicing alone. High salaries for successful lawyers at major firms--some are said to be earning more than 100 million yen annually--are a major lure for young lawyers. But at the same time, the redrawing of the law-office industry map is leading to a wider gap in income among lawyers. Even though the judiciary system reform is expected to double the number of lawyers in 10 years, that does not translate into an increase in lawyers in rural areas. "The overall increase will not trickle down to rural areas because major law firms (based in urban areas) are taking on more lawyers," says a member of a regional bar association. Another lawyer said the income gap almost certainly will further expand in the profession, adding that some lawyers earn only 3 million yen a year. [Non-text portions of this message have been removed]
