Yoshiaki MutoChair, Working Group on Legal Support for Cross-

Border Business of SMEsJapan Federation of Bar Associations

ContentBackground of the InitiativeAction #1 Referral ServicesAction #2 Collaboration with Other

OrganizationsAction #3 Cooperation with Other Bar

AssociationsAction #4 Professional and Knowledge

DevelopmentOther ActionsConclusion

1. BackgroundJapanese SMEs began cross-border business

actively due to the globalization of the economy and maturity of the domestic market

Japanese Government encourages cross-border business and coordinates with many public organizations to offer a variety of support for Japanese SMEs entering into cross-border markets

However, due to multiple reasons, very little legal support has been accessible by and available for Japanese SMEs doing cross-border business

BackgroundObstacles for Japanese SMEs in accessing cross-border legal servicesSMEs are not familiar with international business lawyers, and international business lawyers are not familiar with SMEsInternational business lawyers need to focus on big cases and large transactions of major corporations to sustain a high-value / high-cost business modelDomestic business lawyers are willing to enter into the cross-border legal service market but encounter challenges due to a lack of expertise, knowledge and resources

BackgroundJFBA’s solutionsShort-term: organize existing talents and help match them up with SMEs who need help now >> “International Business Lawyers Referral Service”Mid-term: work together with other organizations and foreign bar associations to provide coordinated accessibility for SMEs >> Domestic Collaboration and International CooperationLong-term: develop human and knowledge resources and help develop a pool of “reasonably priced” international business lawyers targeting SMEs

2. Action #1 Referral ServiceSolicit volunteer international business lawyers who

are capable of and willing to support SMEs, on a half business, half pro-bono basis and create a talent pool

SMEs using business advisory services of certain established support organizations (eg. JETRO, Tokyo Chamber of Commerce and Industry) can ask JFBA to refer an international business lawyer on the list

Offer an initial free of charge consultation, and if retained, provide a standardized and transparent basic legal service program on certain basic legal needs (legal risk assessment, contract drafting, dispute etc.)

Action #1 Referral Service (cont’d)Pre-set Services: (a) business contract drafting and

review, (b) legal risk assessment and solution advice on basic types of cross-border businesses such as purchasing and selling goods, production outsourcing, distributorship, direct investments and (c) strategic legal advise on dispute and confrontational issues

Reasonable and Transparent Pricing: JPY 10,000 (approximately USD 100) for 30 minutes; maximum 10 hours / JPY 200,000 (USD 2,000), plus VAT, per single matter

May extend to a formal engagement if agreed between the client and the lawyer

3. Action #2 Domestic CollaborationJFBA has entered into a formal collaboration /

cooperation agreements with select Japanese public organizations promoting and supporting SMEs’ cross-border business

Menu: Lawyers referral service, joint seminars and educational events, books and publications, etc.

Partners: JETRO, TCCI, Japan Finance Corporation, and Credit Unions Central Bank

Informal “friendship” arrangements: SME & Regional Innovative Organization, and Japan Patent Office

Action #2 Domestic Collaboration (Cont’d)Track records (2012 and 2013 YTD)JETRO: 28 cases for Referral Service; regular cooperative meetingsTCCI: 7 cases for Referral Service; joint educational seminars, attending TCCI’s members meetings, contributing in booklets and periodicalsJFC: 2 cases for Referral Service; regular cooperative meetingsCUCB: 3 cases for Referral Service; legal support for member credit unions’ customer educational eventsSME & Regional Innovative Org: Participating in National SME Crossborder Business Conferences and offering free legal consultation in regional sessions

4. Action #3 Foreign CooperationJFBA has entered into a formal cooperation

agreement with the Law Society of Hong KongMutual referral of SME-focused business lawyers

(e.g., exchange of the lists), joint knowledge development (e.g., mutual updates on SME business related legislations) and joint human resources development (e.g., exchange of young lawyers)

Considering to form similar arrangements with bar associations of other countries where Japanese SMEs invest / local SMEs are active in exporting etc.

5. Action #4 Human and Knowledge Resources DevelopmentNeed to increase the number of business lawyers

who can address basic cross-border legal issues for SMEs (increase “small firm lawyers” who can handle a cross-border practice at a basic level)

Create and run CLE programs for member lawyers aiming to develop legal knowledge and expertise suited for very basic cross-border transactions by SMEs (not big/complex transactions)

Consider setting up a knowledge database (possibly collaborating with other organizations)

Other ActionsJFBA is a member of the “SME Crossborder

Business Support Council” organized by The Small & Medium Enterprise Agency of Japan, and attends regular update meetings. JFBA is also a contributor in the “Overseas Business Risk Guidebook” project, and sends its lawyers to the regional “small business growth initiatives”

JFBA supports local SME support initiatives outside Tokyo (currently Yokohama, Nagoya, Osaka, Fukuoka and Niigata) and coordinates to offer services on a nation-wide basis

6. ConclusionJFBA is committed to promoteLow-cost, conventional legal services on basic issues and transactions which are cross-border in natureCollaboration with other SME support organizations in Japan – business advisors, financial institutions and government agencies in central and regional levelsCooperation across the border – mutual cooperation between bar associations to create a referral network for SME business lawyersKnowledge sharing and professional development

Conclusion (cont’d)Going forward, a new legal practice model may be emerging…Cross-border SME business lawyersDifferent from traditional big business law firmsIndividually connected to / networking with other professionals and foreign colleaguesSharing knowledge and teaming up flexiblySupporting not only “outbounding Japanese SMEs” but also “inbounding foreign SMEs” coming to do business in Japan

Ending RemarksJFBA will-Address SMEs’ increasing importance in the Asian regional market-Respond to SME’s growing demand for cross-border legal services-by committing to driving and expanding the current initiatives and developing a new practice model on SME Cross-Border Business Law-by working together with Asian colleagues

Thank you.

JFBA’s Initiatives to Resolve Legal Obstacles for Cross-border Business by SMEs

Yoshiaki MutoChairWorking Group on Legal Support for Cross-Border Business of SMEsJapan Federation of Bar Associations (JFBA)