The role of Japanese in-house lawyers has undergone a remarkable shift in recent times, says Hideyuki Sakamoto, the president of the Japan In-House Lawyers Association (JILA)
In-house counsel in Japan are no longer restricted to providing routine legal advice, but have become pivotal in expanding and growing Japanese companies overseas. Asia Business Law Journal discusses this phenomenon with Hideyuki Sakamoto, president of the JILA and chief legal officer at Gibraltar Life Insurance in Tokyo.
As we discover, with the intense market competition that has driven Japanese companies to adapt in recent times, the role of in-house lawyers is more crucial now than ever before.
Asia Business Law Journal: How has the role of in-house lawyers in Japan changed in the past few years?
Hideyuki Sakamoto: There has been a change in the role of in-house lawyers in Japan. With the globalisation of businesses and the increasing complexity of legal and regulatory frameworks, in-house lawyers in Japan have taken on more strategic responsibility within their organisations, and are involved in business decisions.
They have also expanded their work areas to areas other than legal departments, such as compliance, risk management, corporate planning and intellectual property departments. Additionally, they are actively tackling emerging issues such as environmental, social and governance (ESG), economic security and cybersecurity because of the heightened need for support for these areas. Furthermore, as legal tech services evolve drastically, more in-house lawyers are using them.
Traditionally, in-house lawyers have been focusing on the protection of the company from legal risks, as a guardian. But nowadays they’re expected to be involved in risk-taking and strategic decisions as a partner. They are assessing legal risks, coming up with solutions and helping management to take legal risks to achieve business goals. That’s the crucial part of the in-house lawyer’s role.
ABLJ: What are some current trends facing in-house lawyers in Japan, and how do in-house counsel stay up to speed on global legal trends and incorporate them into their work?
Sakamoto: The current trends facing in-house lawyers in Japan include enhanced regulations, the globalisation of businesses, technology advancements, and the need for enhanced risk management.
To stay current on global legal trends and incorporate them into their work, in-house lawyers in Japan adopt several strategies. They actively engage in research and read publications to stay informed about legal developments worldwide. They also collaborate with external counsel to understand the implications of international laws and regulations on their organisations. And they attend seminars to acquire new knowledge. To support these efforts, the JILA holds seminars given by experts who are familiar with international regulatory trends.
For example, a recent seminar about ChatGPT was very popular. It attracted a lot of participants, … a record high in the JILA’s history. I think many people were worried about how ChatGPT would change their work and, if ChatGPT is so good, [that] it may eliminate lawyers’ jobs.
I don’t think that would be the case. ChatGPT can prepare quite a good draft. It can even provide a draft like young associates at the law firm, but lawyers still have to check the draft. Sometimes, ChatGPT makes mistakes.
I believe that, by using ChatGPT, lawyers can spend less time on research and drafting; instead, they can spend more time on work that cannot be done by technology, such as communications, fact-finding, issue spotting and solution finding. I think this tool can facilitate lawyers’ work.
ABLJ: How have in-house lawyers in Japan adapted to the increasing use of technology in the legal industry?
Sakamoto: In-house lawyers have embraced legal technologies such as contract life cycle management systems, artificial intelligence (AI) contract review, electronic signature tools, and legal research platforms.
These technologies help streamline legal processes, improve efficiency and reduce costs. In-house lawyers are active in implementing and promoting these technologies and making internal processes within their organisation. They stay updated on the latest legal tech advancements and attend relevant workshops and seminars provided by legal tech vendors.
The JILA actively shares information about legal tech, both internally and externally. Some JILA members are recognised as experts on legal tech and are involved in government regulatory reform discussions.
Currently, the government is in the process of preparing comprehensive guidelines on AI use, including generative AI. The Japanese government is closely following the international trends of AI regulations.
ABLJ: What challenges do in-house lawyers face when managing legal teams across regions, and how can these challenges be addressed?
Sakamoto: Now that business is expanding globally, more in-house lawyers are working with legal teams across regions. They are facing various challenges when managing these diverse legal teams including language barriers, time differences, physical distance and cultural differences. They also need to have a delicate balance between implementing globally standardised policies and respecting varying business practices and legal systems. These challenges can be addressed through several measures.
In-house lawyers encourage open dialogue, ensuring regular team meetings and leveraging technology to facilitate seamless communication across regions and help businesses learn about legal updates and cultures from each other. They also implement standardised processes and policies across regions to promote consistency and streamline workflows. It ensures that their teams are aligned in their approach, making it easier to manage and co-ordinate work across different jurisdictions.
Additionally, they leverage the expertise of local counsel in each region. In-house lawyers can hire local in-house counsel and/or partners with local law firms to understand the local legal landscape and facilitate compliance with local regulations. They also try to build a trusting relationship with the local management through online or in-person meetings.
ABLJ: What strategies have in-house lawyers in Japan used to manage external legal costs?
Sakamoto: Managing external legal costs is an important part of an in-house lawyer’s job. Building a strong in-house legal team allows companies to handle a broader range of legal matters internally and reduce the need for external legal services and associated costs. This is one of the reasons that the number of in-house lawyers in Japan has increased drastically in the past 20 years.
In-house lawyers establish relationships with selected outside counsel based on their specialities, and use project management skills to effectively manage legal matters and control costs. In-house lawyers stay updated on the latest legal tech advancements and optimise costs for legal tech based on business needs.
ABLJ: What initiatives is the JILA undertaking to support the development of young lawyers in Japan amid the changing workforce?
Sakamoto: The majority of in-house lawyers’ experience is less than 15 years. So, the JILA has undertaken various initiatives to support the development of young and middle-level in-house lawyers, which includes conducting seminars on current legal trends, emerging areas of law, and practical aspects of in-house legal work including legal tech, legal operations, and environmental, social and governance.
We also provide career tips through JILA magazines and hold events where experienced in-house lawyers provide career advice to young lawyers. This helps them navigate their careers, develop skills and gain insights into the profession. We also offer financial aid to young in-house lawyers to attend international conferences.
Also, the JILA connects with international legal associations all over the world, and legal operation associations, to offer opportunities for international events to the JILA members.
ABLJ: What would be the best arrangement for legal teams to work in after the new normal in your view?
Sakamoto: Before the pandemic, many people believed that it was necessary to go to the office every day, but during the pandemic people realised that they could work from home every day.
Nowadays, more companies are asking employees to go to the office two or three days a week and use a hybrid work style. I think working from home is convenient because employees don’t have to commute and can spend time on work and/or private matters instead.
However, working at the office has some benefits including being able to meet team members and business partners in person, have casual conversations after or before the meeting, and build personal relationships. A hybrid work style can provide both benefits, so I think many companies are using this work style.