"The Japanese still think that using a lawyer is a big deal, because most of them have never used one, and they have no friends or acquaintances who are lawyers. It's certainly vastly different from the situation in Israel, which is known for its large number of lawyers, so that everyone here has a number of lawyers in his social circle. The number of lawyers in Japan has grown, but we still have a long way to go in this matter," says Adv. Hajime Iwaki, head of the commercial department in the Japanese branch of DLA Piper, the world's largest law firm, who visited Israel recently. In an interview, Iwaki told "Globes" about the differences between the legal markets in Japan and Israel, working with lawyers and businessmen in Israel, and the opportunities awaiting Israelis in Japan.
58,000 active lawyers are registered with the Israel Bar Association, a world record of one lawyer per 139 residents. Japan has 36,429 lawyers in country of 127 million residents - one lawyer per 3,486 residents. There were less than 16,000 lawyers in Japan in 1997, so the number has more than doubled since then, but the ratio of lawyers to people is still nowhere near that in Israel. "It's true that the number of lawyers in Japan is still smaller than in other countries," Iwaki says. "Instead, for years Japan has relied on a level of professionals in a variety of fields, such as corporations, real estate, public administration, and so forth. This also happens because traditionally, in the past, Japanese lawyers deal only in litigation. Only recently have we begun dealing more and more with commercial subjects."
"Globes": It's said in Israel that everything is justiciable, and people complain that everything becomes a legal issue. What is the Japanese experience in this context?
Iwaki: "I'd say that with us, the situation is diametrically opposite to your situation. In general, Japan is known as a non-litigious country, and the Japanese are very anxious about using legal measures to solve business or civil disputes. Instead of going to court, the Japanese are inclined to turn to informal mediation by an agreed mediator known to both parties. This also affects business and the regulatory culture, because instead of asking a lawyer for legal advice on a disputed issue, people prefer to ask the government for guidance. Government officials sometimes demand a standard of behavior from those appealing to them, or make greater demands than those established by law, based on their belief that this is the right attitude from a "moral" or "logical" perspective. I assume that this also happens because of the relatively low prominence of lawyers in Japan.
Unwritten laws
It is no secret that there is not much in common, if anything, between deeply rooted Japanese culture and Israeli culture. This profound difference is also reflected in the legal arena. The contracts drawn up, documents submitted to the courts, and the character of the legal disputes and how they are conducted in the courts in Japan are very different from the emoting, theatricality, and belligerence typical of the appearance by lawyers and parties in courts in Israel. "We're at pretty much oppose tends of the scale in this context," Iwaki says. In describing the situation in Japan, he says, "It is rare in Japan to see parties contesting belligerently with each other in courts. Furthermore, there is today only a small number of firms that submit long documents to the courts in Japan. Most court documents are extremely brief, and contracts are short. For example, in contrast to the US and Europe, a lease for a large commercial building consists of only a few pages."
In Israel, lawyers tend to write everything in contracts and court documents, sometimes too much, in order to leave nothing to the imagination or interpretation of the courts and even then, it is still possible to argue.
"It's hard for people outside of Japan to understand, but we have a lot of unwritten laws and traditional customs that in the end produce the same result on fewer pages, even if the contracts are silent on a given matter. I understand that this is because Japanese culture is less dynamic and culturally diverse. So many times, Western clients as for extensions and clarifications in contracts, but the response of the other party is usually that there are unwritten laws and that there is no point in writing this if it is already known."
Around the world
Iwaki arrived in Israel law month to take part in a seminar conducted by the DLA Piper law firm in cooperation with the Meitar Liquornik Geva Leshem Tal and KPMG Somekh Chaikin law firms and the Israel Advanced Technology Industries organization on "Business Strategy in Asia, not only in China." This is his second visit to Israel; the first was 20 years ago. "I went to the Jerusalem and the Dead Sea then. I remember that when I arrived, I got the impression that Israel was a beautiful place, and although my visit this time is relatively short, and I don't really have time for trips, I see that this hasn't changed," he remarks.
On this visit for business purposes, he is accompanied by another law firm partner, Adv. Makiko Kawamura. As part of their visit, they met with a number of the firm's clients companies interested in doing business in Japan, and local law firms with which they are cooperating. Iwaki is considered one of the leading lawyers in Japan, and his arrival in Israel shows the great business potential his firm sees in Israel.
DLA Piper is the world's largest law firm, with over 4,200 lawyers in 77 branches in 31 countries. The firm began doing business in Israel in 2008 through Adv. Jeremy Lustman, a partner in the firm, who moved from the US to Israel. In recent years, the firm was party in several of the biggest deals by Israeli companies, including consultation for Menorah Mivtachim Holdings Ltd. (TASE: MORA) in its acquisition of the real estate portfolio of VBG in Germany for €84.9 million, representing Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) in a project estimated in the tens of millions of dollars in financing the construction of a 30-storey dormitory tower for Pace University in Manhattan, representing Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) in a joint venture with Harbor Group for the purchase of a shopping center in Las Vegas for $27.9 million, and representing Migdal in a joint venture with Harbor Group n the purchase of the CNN tower in Washington for $107 million.
The firm also represented Fortissimo Capital in its acquisition of Starhome from Comverse Inc. (Nasdaq: CNSI) for $80 million, LycoRed in its acquisition of Ukrainian company Vitan, Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) in its acquisition of Micron Technologies for $140 million, and more. DLA Piper's clients in Israel include Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), Harel, Menorah, Netafim Ltd., Makhteshim-Agan, Israel Chemicals (TASE: ICL: NYSE: ICL), El Al Israel Airlines Ltd. (TASE: ELAL), Caesarstone Sdot Yam Ltd. (Nasdaq: CSTE), Gazit-Globe Ltd. (NYSE: GZT; TASE: GZT; TSX: GZT), Comverse, Verint Systems Inc. (Nasdaq: VRNT), SodaStream International Ltd. (Nasdaq: SODA), Nova Measuring Instruments Ltd. (Nasdaq:NVMI; TASE:NVMI), Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; Bulletin Board: FRUTF), Tower Semiconductor, Fortissimo Fund, Shamrock Israel Growth Fund, Vintage Investment Partners, Genesis Partners, Gemini Israel Ventures, Vertex Venture Capital, Veritas Venture Partners , Check Point Software Technologies Ltd. (Nasdaq: CHKP), Israel Cleantech Ventures Funds, Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), etc.
One of the areas in which DLA Piper has established its status as a super firm is the Asian Pacific region, where it has 12 offices in Japan Singapore, South Korea, Thailand, and Australia. This global deployment has opened the Israeli market to Iwaki's clients, and vice versa. Iwaki has already advised quite a few clients in Israel on matter pertaining to Japan. Among other things, he advised Israeli company TowerJazz in creating a joint venture with Panasonic.
What do you think about Israeli businessmen and lawyers?
"I work with more than a few Israeli lawyers and businessmen, and I'm always surprised by their work style. It is very important for both Israeli businessmen and lawyers to define goals and targets, and they always try to think what the best way is of achieving what they want. The Japanese work style, on the other hand, involves small details and the process itself to a far greater extent, and then this contrast sometimes arises in the conference rooms."
Iwaki gives an example of these differences from the conference room. "While TowerJazz sent a limited number of senior executives to Japan in order to close outstanding issues relating to the joint venture with Panasonic, Panasonic brought 20 people to the meeting. In addition, at a time when all the Israelis were talking freely, only the most senior Panasonic executive spoke. All of the other 19 remained silent, listening politely and revealing nothing about their views. They behaved this way because according to the business culture in Japan, decisions are made jointly on a collective and consensual basis, which lengthens the response time. It has therefore happened more than once that a Western businessman talks to his Japanese counterpart, who can tell him all sorts of things, but has no authority to decide anything, because he has to bring any decision to the level above him, which naturally takes quite a bit of time. This means that things in Japan don't always move like you thought they would, and Israeli companies trying to do business in Japan have to realize this."
Which fields do you recommend Israeli businessmen should enter in Japan?
"No doubt about it the technology sector. Japan has experienced engineers and advanced production technologies, and quite a bit of interesting research and development is taking place there. I therefore think that we have a lot of room for cooperation with Israeli companies that can spot market needs, refine the differentiation from the competitors' products, develop smart business strategies for penetrating additional international markets, and find additional global partners for expansion. There's a saying that Japan is product out, meaning that Japan makes products that are not up-to-date enough in a world of sophisticated consumer products and personalization.
Nevertheless, it’s important to emphasize - Japan is still the world's third largest economy, with a sophisticated market of consumers and strong purchasing power. Many Israeli companies make consumer products come to Japan and successfully fit into the market. If you have confidence in your product, Japanese people are willing to pay the asked premium for high-quality products. Once the product is successful, it's much easier to go from Japan to other markets in Asia."
On the other hand, which Israeli businesses could be of interest to the business community in Japan?
"When Japanese people are considering an investment in Israel, IT, security, and weapons are the most popular sectors. It could be that there are additional opportunities here for the business community in Japan, but they are not yet well enough known."
Israel is worried about a boycott of Israeli businesses as a result of pressure by Arab groups. Have you seen things like this?
"I have not encountered even a trace of such a thing in Japan. The Japanese are pretty neutral on this question, and we have no strong political position on these tensions, among other things because we are too distant geographically, and because Japanese are not familiar with the history and complexity of the conflicts in the Middle East."
What could contribute to progress in economic relations between Japan and Israel?
"First of all, the Japanese have to make an effort to get to know Israel better. Not many people in Japan are aware that Israel has a significant presence in the global technology sector. They miss many opportunities for this reason. On the other hand, I got the impression that Israelis also don't know the Japanese very well and tend to underestimate Japan, and that in many cases, Asia is a synonym for China. The Japanese prime minister recently visited Israel, and talks began on promoting business and other business cooperation. We see ready opportunities here for a series of cooperative efforts. It's time we got to know each other better."
Published by Globes [online], Israel business news - www.globes-online.com - on August 13, 2015
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