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At the northeast corner of the Imperial Palace gardens in Tokyo’s Marunouchi district, the main business district of the world’s second-largest economy, stands the AIG Building. For 16 years Morrison & Foerster has made a home for itself in this granite hulk, more reminiscent of the utilitarian architecture of the Soviet bloc than the bright neon of Tokyo. But the view and the location make it one of the most prestigious in all Japan, and signal that the firm notices the subtleties of Japanese culture. “It feels like you’re in Japan,” says Ken Siegel, MoFo’s Tokyo managing partner. Morrison & Foerster clients — including household names like Fujitsu Ltd., Hitachi Ltd., and the Toshiba Corp. — appear to lap it up. They drop by when they’re in the neighborhood, sometimes to just say konnichiwa (hi!), sometimes to spend hours reviewing strategy and differences between foreign and Japanese laws. Siegel has a long history with the building. As a new associate, he leased the space in 1987, just after the Diet, Japan’s parliament, loosened the ban on foreign law offices. Since then, the Tokyo office has grown steadily, from three to 50. With 40 foreign attorneys, MoFo’s is now the largest foreign office in Tokyo. And in a country where only five firms have passed the 100-lawyer mark, Morrison & Foerster and its Japanese joint venture, Ito & Mitomi, are the ninth-largest of any firm in Japan, foreign or domestic. For foreign firms, the Japanese legal market has been a very expensive roller-coaster ride. U.S. firms rushed in during the economic boom of the 1980s and then sharply cut back as it came to an ugly end. Now the rules are changing again. In July, the Diet reversed a long-standing policy barring foreign firms from directly hiring Japanese lawyers, known as bengoshi, and has ordered the bar association to draft rules to implement the law by summer 2005. Morrison & Foerster is poised to make its alliance with 10-lawyer Ito & Mitomi permanent. Other U.S. firms are trolling for laterals or looking to ship American-trained Japanese lawyers back home. Predictably, some in the local bar are worried, expressing concerns about their future. But for Siegel, it’s just another turn in a career that has managed to blend personal and professional needs into a successful pan-Pacific fusion. In 1981, Siegel, too poor to travel the world with his buddies, stuck around Amherst College after graduation to earn some extra cash. There, he met Michiyo Tanaka, an exchange student spending the summer studying English literature. He was smitten, and when she went home to Kyoto, he decided to spend the next year there studying Japanese. Three years later, at the end of his first year at the University of Chicago Law School, the two married. Today, Siegel is steeped in his wife’s native culture, which has greatly influenced his practice. Clients appreciate that they have someone who understands them, linguistically and otherwise, and they frequently attribute Siegel’s Japanese savvy — from presenting business cards correctly (with both hands and a slight bow) to knowing just how aggressively to pursue a given client — to Michiyo. When they were just starting out, the Siegels hoped to raise a family in both countries, which is why Ken applied for summer associate positions at firms with Asian interests. At the time, MoFo was defending Fujitsu in a landmark patent suit brought by IBM. The firm needed attorneys with Asian language skills, so it hired Siegel for the summer of 1985, then sent him back to Japan after he graduated for more language classes. When the law changed in 1987, permitting foreign firms to establish offices, Morrison & Foerster assigned Siegel the task of finding office space. He didn’t have far to look. His wife was in charge of administration at Prudential Securities Inc. in Tokyo, which was about to move out of its space in the AIG Building. Prudential leased its space to MoFo, and the firm took on a more serious Japanese tinge. Harold McElhinny was heading up the Fujitsu litigation at the time. Now back in San Francisco, he laughs and shakes his head, saying, “You can’t imagine how embarrassing it is to know I brought in the guy who would become one of our most successful partners as a gofer.” FOREIGN LAWYERS FACE OBSTACLES Foreign attorneys, or gaiben (short for gaikokuho jimu bengoshi), have had to overcome more than just legal barriers to practice successfully in Japan. For example, the desire to avoid open confrontation encourages speedy private resolutions rather than drawn-out battles in open court. In a business climate where midlevel executives are expected to answer questions from superiors on any aspect of a relevant legal issue at a moment’s notice, gaiben must be willing to spend long hours thoroughly explaining nuances — such as why U.S. companies tend to view lawsuits as business tools rather than as social stigmas. They also must reassure clients that documents handed over during discovery, which did not exist in Japan until a few years ago, won’t be shared with competitors. Partly because Morrison & Foerster lawyers were willing to take the time to explain these differences and review options with clients, work started pouring in. For its part, MoFo says it doesn’t calculate revenue on an office-by-office basis. But it estimates that revenue from its Japan-related practice has grown from about $15 million in 1992 to $65 million in 2002, about 13 percent of the firm’s 2002 gross revenue of $505 million. Siegel stayed through the office’s inaugural year, then returned to the United States in 1988 to work in the corporate finance department of MoFo’s main office in San Francisco. During the next six years, daughters Julie and Hannah were born, and the family returned to Tokyo in 1994, planning another limited stay. Two years later, however, Siegel was named managing partner, and, as the family’s roots in Tokyo grew, return plans became more vague. “I had planned to be here five years, but professionally it is so interesting here, and personally the kids have been settled in very well,” Siegel says. Siegel isn’t the only MoFo attorney whose repatriation has been put on hold. That’s due to several factors, from the personal (Siegel says three-quarters of the office’s 40 foreign attorneys have long-term ties, such as a Japanese spouse) to the professional. Eleven associates have made partner in Tokyo, proving that the office is hardly a professional exile. ONE BOLD MOVE In retrospect, MoFo’s success in Japan turned on one bold move. After the bubble economy collapsed in 1991, the firm continued to send over lawyers and draw clients. Before then, Carl Anduri, the office’s first managing partner, had focused solely on building a Japanese client base, getting letters of introduction from the firm’s existing Japanese clients, which initially numbered about 60 — mostly banks, trading companies, and electronics concerns. Anduri also offered legal seminars for in-house lawyers who were eager to learn more about foreign laws and trends. (He had to send most of the work to U.S. offices.) By 1991, however, Anduri conservatively estimates that Morrison & Foerster had more than 500 Japanese clients. When Robert Townsend took over in 1993, he could afford to shift the focus to bringing over more lawyers so that work could be done locally. During the three years Townsend led the office, it grew from four to 10 foreign attorneys. By investing more lawyers in Tokyo as others were leaving, Morrison & Foerster says it could provide better service, and make a statement that the firm was in Japan for the long haul. Though a handful of other firms had a head start — Baker & McKenzie; Coudert Brothers; and Milbank, Tweed, Hadley & McCloy found ways around the ban through personal exemptions or unique relationships with Japanese firms in the 1960s and 1970s — none have been willing to brave the foundering economy and post so many U.S. attorneys, particularly senior partners, in Japan. As a result, MoFo managing partner Keith Wetmore can say plausibly, “We’re really not all that worried about competition.” For all that, the firm’s Tokyo office was not a business paradise. The office Siegel inherited from Townsend had a moribund real estate practice and a litigation group that was living off the fumes of the long finished Fujitsu-IBM case. Real estate was turning around in Tokyo, but instead of Japanese investors trying to buy landmarks around the world, foreign investors had started to buy local properties. Earlier this year, Siegel recruited two American lateral partners already in Tokyo and turned the practice over to Frederick Lodge, a real estate dealmaker who had run MoFo’s New York office. In litigation, Karen Hagberg, an IP specialist from New York, moved to Tokyo to build on MoFo’s existing client base, and the practice appears to have revived. Hagberg was replaced by Alan Johnston, another IP specialist who opened MoFo’s Palo Alto, Calif., office and led its litigation group. Because Morrison & Foerster has focused on developing its foreign practice, the Diet’s 1995 decision to further relax restrictions — allowing Tokyo offices to form joint ventures to offer local law practices — had little impact on its strategy. In fact, Siegel waited until 1999 to start actively recruiting Fuyuo Mitomi, a well-respected bengoshi who had worked briefly at MoFo after earning an LL.M. at Harvard Law School in 1978. Despite Mitomi’s earlier experience with MoFo, Siegel says it took two years to lure him from what is now Tomotsune, Kimura & Mitomi, where he was name partner. JAPANESE LAWEYRS HOLD GROUND Bengoshi have long opposed ceding any ground to foreign attorneys since ousting them in 1955, three years after the end of the post-World War II occupation by the United States. Though older bengoshi grant that foreign attorneys played an important role in developing the legal profession under the postwar constitution, they resented the presumption of some foreigners. Many still harbor memories of slights and see only trouble from foreign lawyers returning to Japan. The Japanese bar remains concerned that further loosening of restrictions will jeopardize bengoshi. Kimitoshi Yabuki, the director of the Office of International Affairs of the Japan Federation of Bar Associations, or Nichibenren, will be spending the next two years drafting rules to implement reforms passed this July allowing foreign firms to directly hire bengoshi and merge with their joint ventures. But he worries the bar won’t be able to enforce the existing laws preventing foreign employers from telling bengoshi how to practice Japanese law. “Those foreign attorneys introduced business law to us,” says Hideshige Haruki, a name partner at the 10-lawyer firm of Haruki, Sawai & Inoue. “Without that early influence, we couldn’t develop, [but] they were very nasty. They treated us as animals, pigs, and thugs,” adds Haruki, who worked at Graham & James, one of the U.S. firms in Japan following World War II. Today, foreign firms are again encroaching on his practice, Haruki says. He just lost two young associates to American firms that “don’t hesitate to just call and hire them,” he says in disgust. Defector bengoshi view things differently. They cite reasons for leaving such as a desire to specialize (few Japanese firms are large enough to support specialty practice areas) and work internationally (overseas offices and non-Japanese attorneys are rarities). Japanese firms have another reason to worry: Japanese clients like the treatment they get from foreign attorneys who actively campaign for their work. Haruki has lost several clients to American firms that send “young attorneys to meet with them free of charge. I can’t afford that,” he says. Japanese clients have little sympathy. “So what? I have the right to choose the best legal services,” says Masanobu Katoh, group president of Fujitsu’s Intellectual Property Group & Security Export Control Headquarters. On the basis of his experience with outside counsel elsewhere, Katoh says Japanese firms should be concerned. “Foreign firms do pose a threat to Japanese firms,” he says. “They have to change.” Where does all this leave Morrison & Foerster going forward? Managing partner Wetmore says he “could easily see a 100-lawyer office in Tokyo,” and plans to merge with Ito & Mitomi as soon as possible. Siegel has more specific goals for growth; he’d like to significantly expand the real estate and litigation practice groups, while keeping the M&A group level. As for Ito & Mitomi, Siegel hopes to soon increase the bengoshi-foreign attorney ratio to 1-to-3 (it’s currently 1-to-4). For someone with no designs on Japan until one summer 22 years ago, Siegel has developed quite a few since then. Fortunately for MoFo, none of those plans include booking a return flight. Heather Smith is assistant editor at The American Lawyer, where this article first appeared in the November issue.

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