Follow ACC Docket Online:  

A Statistical Analysis on Development of the In-house Practice in Japan

A few years ago, I provided a chronological overview of the development of in-house practice in Japan in a feature article published in ACC Docket. In this note, I will attempt to follow-up on this previous work by focusing on the structure of the population of in-house counsel in Japan and its unique correlation to legal experience.

Starting in 2001, the Japan In-house Lawyers Association (JILA) has annually published statistics regarding the population of in-house lawyers in the country based on post qualified experience (PQI). In the figure below, I have restructured the data to showcase the percentage of in-house lawyers hired based on experience over time.

This illustration exemplifies a “big bang” period — where the total population of in-house lawyers explosively increased from 146 in 2006 to 1,707 in 2016. In 2007, newly qualified lawyers accounted for only 23.8 percent of the total in-house population. Alternatively, in 2009, this number increased dramatically to account for nearly 80 percent — showing the conventional preference of Japanese companies toward lawyers moving to in-house counsel shortly after completing their legal education.

In recent years, however, we are beginning to see that experience has become more of a factor in hiring decisions. Newly qualified lawyers are not favored as heavily in 2017 as they might have been in 2009. Instead, the prominence of those with one to three years of legal experience has grown almost five times to account for approximately 30 percent of the in-house population.

Japan in-house chart

The above statistics seem to showcase the ambivalent thoughts of many Japanese companies. On the one hand, there is a clear interest in continuing foster the more traditional in-house community in Japan. However, a growing number of Japanese companies are shifting their requirements — mandating that in-house lawyers be skilled professionals with pre-established experience. Accordingly, seeking in-house counsel with one to three years of qualification serves as a compromise to balance these perspectives.

Nevertheless, over the last four years, the ratio of newly qualified in-house counsel has remained relatively stable — accounting for roughly 45 percent of the total population. Looking to the future, I anticipate that a growing challenge for those young in-house lawyers, and ultimately for in-house counsel in Japan overall, will be to establish themselves as trusted advisors to the business — highlighting their capability, status, and identity in such an environment where junior lawyers are surrounded by non-professionals.

When I first wrote on this subject a few years ago, I presumed that there might be a shift in hiring practices to prioritize lawyers with more experience. In response to an increasingly complex global regulatory environment, Japanese companies are placing more of an emphasis on in-house counsel to have expertise maneuvering such a landscape.

However, as discussed above, this has been and will continue to be a gradual shift. Most companies have attempted to find a balance in experience — prioritizing both professionalism and the in-house community. It might also be worth noting that prominence of lawyers with deep-seated experience in the legal profession (seven to 10 years) has also risen substantially over the last two years. Would it be an indication that some Japanese companies are turning to their eye to more experienced lawyers? Well, it would be too early to draw any firm conclusion.

About the Author

Masahiro Homma is the chief legal officer of Nissin Foods Holdings Co. Ltd.

The information in any resource collected in this virtual library should not be construed as legal advice or legal opinion on specific facts and should not be considered representative of the views of its authors, its sponsors, and/or ACC. These resources are not intended as a definitive statement on the subject addressed. Rather, they are intended to serve as a tool providing practical advice and references for the busy in-house practitioner and other readers.