Changes in the Role of Lawyers and Corporate Governance in Japan - How Do We Measure Whether Legal Reform Leads to Real Change?

Abstract

This Essay is part of a festschrift in honor of John Owen Haley and appears in a special issue of Washington University Global Studies Law Review. Haley is best known for his work on continuity and change in Japanese law and society. This Essay utilizes a case study on change in Japan in the areas of the legal profession and corporate governance to explore the question of the appropriate criteria for evaluating whether legal reform results in "real" change in practice. Comparative studies tend to either focus narrowly on case studies and emphasize change that has occurred, or, more commonly, look for a complete systemic transformation and, finding none, conclude that legal reform is not effective. In either case, the choice of a standard for measuring change seems largely outcome determinative.

This Essay seeks to illustrate the potential "middle ground" of significant change which falls short of a systemic transformation by formulating and applying criteria for measuring change in the areas of the legal profession and corporate governance in Japan. This exercise does, indeed, lead to different results than the most common analysis which focuses on the lack of any systemic transformation. In the case of the legal profession, this Essay's focus on the demand for legal services, the supply of lawyers, and an expansion in the role of lawyers arguably points to significant change in the legal profession over the past decade. In the area of corporate governance, a greater emphasis on the monitoring of management and change in ownership structure, rather than solely on the maximization of shareholder value, may result in a closer question than is generally acknowledged, with important changes in corporate practice indicated in a number of areas.

Keywords: Japan, comparative law, legal profession, corporate governance

JEL Classification: K22, K33