Yoshiaki Muto Chair, Working Group on Legal Support for Cross-Border Business of SMEs Japan Federation of Bar Associations

Content Background of the Initiative Action #1 Referral Services Action #2 Collaboration with Other Organizations Action #3 Cooperation with Other Bar Associations Action #4 Professional and Knowledge Development Other Actions Conclusion

1. Background Japanese 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

Background Obstacles for Japanese SMEs in accessing cross-border legal services SMEs are not familiar with international business lawyers, and international business lawyers are not familiar with SMEs International business lawyers need to focus on big cases and large transactions of major corporations to sustain a high-value / high-cost business model Domestic 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

Background JFBA’s solutions Short-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 Cooperation Long-term: develop human and knowledge resources and help develop a pool of “reasonably priced” international business lawyers targeting SMEs

2. Action #1 Referral Service Solicit 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 Collaboration JFBA 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 meetings TCCI: 7 cases for Referral Service; joint educational seminars, attending TCCI’s members meetings, contributing in booklets and periodicals JFC: 2 cases for Referral Service; regular cooperative meetings CUCB: 3 cases for Referral Service; legal support for member credit unions’ customer educational events SME & Regional Innovative Org: Participating in National SME Crossborder Business Conferences and offering free legal consultation in regional sessions

4. Action #3 Foreign Cooperation JFBA has entered into a formal cooperation agreement with the Law Society of Hong Kong Mutual 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 Development Need 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 Actions JFBA 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. Conclusion JFBA is committed to promote Low-cost, conventional legal services on basic issues and transactions which are cross-border in nature Collaboration with other SME support organizations in Japan – business advisors, financial institutions and government agencies in central and regional levels Cooperation across the border – mutual cooperation between bar associations to create a referral network for SME business lawyers Knowledge sharing and professional development

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

Ending Remarks JFBA 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 Muto Chair Working Group on Legal Support for Cross-Border Business of SMEs Japan Federation of Bar Associations (JFBA)