Japan’s largest law firms—Nishimura & Asahi; Nagashima Ohno & Tsunematsu; Mori Hamada & Matsumoto; and Anderson Mōri & Tomotsune—continue to be monoliths in the Japanese market, dominating in the value of their deals as well as on the number of lawyers they employ. But one upstart firm has positioned itself to be a contender, hoping to compete with these firms, which have come to be known as Japan’s “big four.”
“Four law firms are too few for the Japanese M&A market and I think we are in a good position to be one of the big ones,” said Takushi Saito, a partner at TMI Associates in Tokyo.
TMI Associates, a law firm best known for its intellectual property practice, has been expanding. Founded in 1990, it ranked fifth in Japan by head count from 2010 to 2018, with more than 350 lawyers, according to data published by the Japan Federation of Bar Associations (JFBA). In 2019 and 2021, it placed fourth, boasting a head count of more than 450 lawyers and overtaking one of the big four.
And it’s not just growing in lawyer head count. TMI, which has six offices in Japan, 10 overseas, and has a joint venture agreement with the international firms Simmons & Simmons, Morgan Lewis & Bockius and Germany-based ARQIS Foreign Law Office, has also grabbed an increasingly larger share of Japanese M&A deals among both Japanese and international firms.
In the two years prior to the outbreak of COVID-19, for example, TMI ranked 13th and 17th out of 20 Japanese and international law firms in deal count—with fewer than 15 deals, according to M&A data published by Bloomberg. But in 2020, it leaped to the No. 5 spot, with 60 deals, and held on to that rank in 2021with 88 deals.
“TMI was founded in 1990 with 20 or so people including lawyers and support staff. But now it has a total workforce of more than 1,000 people,” said Aaron Patience, the managing partner of Simmons & Simmons’ Tokyo office. “It also has made a number of high-profile lateral hires over the years, particularly in the M&A space, and some very senior heavy hitters have been hired from places like Nishimura & Asahi.”
Those hires include Masakazu Iwakura, an M&A and corporate governance specialist registered to practice both in Japan and the U.S., who joined TMI as a partner from Nishimura & Asahi in January 2017.
TMI’s Saito, an M&A partner, concedes that Japan’s big four still dominate the country’s M&A market and that isn’t likely to change. But that market is expanding very rapidly and the four firms can’t keep up with demand, he says, adding that clients are increasingly asking his firm to advise on their M&A transactions, including on hostile takeovers in which TMI has mainly been counsel to the Japanese target side.
Still, Japan’s big four, as a group, are tough to beat. They ranked among the top seven out of 20 domestic and global firms based on the total value of completed Japanese M&A deals in 2021, reaching a combined median transaction value of approximately $35 billion, or nearly half of the total market share, according to a Bloomberg M&A report. Before COVID, they ranked among the top five—with the combined median value of deals worth more than $50.7 billion—a total market share of 77%.
“The big four, which gained a reputation for different practice areas in the early days, have over the years evolved into one big, merged group with similar practices and capabilities,” said Nobuhisa Ishizuka, executive director of the Center for Japanese Legal Studies at Columbia Law School and a former partner of Skadden, Arps, Slate, Meagher & Flom.
And competing gets even more difficult when handling work overseas. While TMI has been taking advantage of its contractual joint venture-based network to support its Japanese clients outside of Japan, the big four maintain full control over their integrated international network, Ishizuka said. Its joint venture partners Morgan, Lewis & Bockius, and Arquis Foreign Law Office did not respond to a request for comment.
Nishimura & Asahi, the largest of Japan’s big four by head count is focusing on Asia, especially Southeast Asia, where each office has local law advisory capability, said Ryutaro Nakayama, managing partner of the firm in Tokyo. It acquired leading Thai law firm SCL Group in 2019, and entered into a formal law alliance with Bayfront Law in Singapore in 2020. In those markets, the firm can give full local law service not only to Japanese clients but also local ones, Nakayama said. It also has bases in Beijing, Shanghai, Hanoi, Ho Chi Minh City and Taipei.
Outside of Asia, Nishimura also has offices in Frankfurt, Düsseldorf and New York, although for now, the main purpose of those outposts is to respond to Japanese clients’ needs for timely, first-hand information and precise analysis of local law prior to an M&A deal, and to connect clients to the best local law firms in those markets, Nakayama said.
With Japanese companies undergoing digital transformation in recent years, Nishimura has also sought to further expand its IP practice to respond to greater needs for advice on IP matters. The addition of Makiko Takabe, a former chief judge of the Intellectual Property High Court, as of counsel in October 2021, has boosted the firm’s IP capability. The firm also plans to further expand its energy practice, Nakayama said.
The remaining three of Japan’s big four firms—Nagashima Ohno & Tsunematsu; Mori Hamada & Matsumoto; and Anderson Mōri & Tomotsune—declined to comment for this story.
Meanwhile, international law firms in Japan continue, as a rule, to be overshadowed by Japanese peers when it comes to deal count, although some, such as White & Case, have secured top spots in rankings based on transaction value—doing so with many fewer cases, according to Bloomberg data.
In the domestic M&A market, however, the big four, and more recently TMI Associates, have been leading both in deal value and deal count, according to Japanese league tables. “The international law firms in Japan don’t want to challenge the big four,” Columbia Law School’s Ishizuka said, noting that they often work with the big four firms, especially on very big transactions.
TMI, however, is not easing up on its ambitions—especially outside of Japan. The firm currently has 10 overseas offices—in Shanghai, Beijing, Yangon, Singapore, Ho Chi Minh City, Hanoi, Phnom Penh, Bangkok, Silicon Valley and London. It is now seeking to expand its presence in Africa, the Middle East and Latin America, co-founding partner Tomohiro Tohyama said.
And it may not stop at M&A, according to Simmons & Simmons’ Patience.
“It’s been seeking our help with growing its arbitration practice,” he said.