Attorneys handle legal analysis, counterparty negotiations, debt collection, contract matters, and related work end-to-end, helping companies reduce compliance risk under Article 72 of the Attorney Act and optimize overall legal costs.

SAKURA Law Office is pleased to announce the launch of “Legal Outsourcing (Corporate Legal Operations & Negotiation Support),” a service for corporate clients under which our attorneys provide end-to-end support for day-to-day legal matters, including debt collection, contract termination and amendment, employment matters, real estate, negotiations with financial institutions, M&A, and other corporate legal issues. Our attorneys handle the matter from legal analysis through counterparty negotiations, preparation of notices and settlement or other agreements, and, where necessary, dispute resolution proceedings.

This service is designed for work that companies have traditionally entrusted to management consultants, various agency service providers, property managers, M&A advisory firms, and other external specialists, but that in substance involves legal analysis or representation and negotiation in connection with a legal matter. Our attorneys undertake those legal components lawfully and professionally, while coordinating with the client’s in-house legal function and existing external advisers. The service is not limited to providing legal opinions. Its purpose is to move negotiations forward in practice and achieve concrete outcomes such as recovery of receivables, termination or amendment of contracts, settlement, and other forms of resolution.

Background to the Service – When the Boundary Between “Support” and “Legal Services” Becomes a Corporate Risk

In recent years, a wide range of agency and consulting services have become common, including resignation agency services, debt-collection support, rent collection, leasing and tenant-vacating support, contract review, assistance in dealing with financial institutions, M&A support, and other services that handle certain matters on behalf of companies or individuals. Many such services are useful and may lawfully be provided by the relevant specialists, including management analysis, preparation of financial materials, business planning, operational improvement, and other forms of professional support.

At the same time, once the work moves into the realm of making legal determinations regarding a specific contract or specific rights and obligations, or representing a client in exchanging legal claims and defenses with a counterparty and negotiating amounts, payment terms, contract termination, damages, or other legal conditions, careful consideration must be given to Article 72 of the Attorney Act. Article 72 generally prohibits a person who is neither an attorney nor a Legal Professional Corporation from, for the purpose of obtaining compensation and as a business, handling legal services – such as giving legal opinions, acting as an agent, handling arbitration or settlements, or otherwise providing legal services – in connection with litigation or other general legal matters, or acting as an intermediary for such services. Where another law grants authority to a particular licensed professional, that statutory authority is treated separately. But negotiating legal issues on behalf of a client is a core area in which the applicability of Article 72 must be carefully examined.

The Tokyo Bar Association has likewise continued to issue warnings regarding resignation agency services, noting that where a non-attorney service provider negotiates with an employer on behalf of an individual regarding legal issues such as unpaid overtime, resignation terms, or damages arising from workplace harassment, the conduct may constitute unauthorized practice of law. The decisive question is not whether a service is labeled “agency,” “support,” or “consulting,” but what the provider actually does in substance.

SAKURA Law Office does not take the position that external service providers in this field should be rejected across the board. Professionals in management, finance, human resources, IT, real estate, and other fields provide significant value when acting within their respective areas of expertise. At the same time, where a matter enters the territory of legal analysis or legal negotiation, we believe it is important – also for the company’s own protection – to involve an attorney at the appropriate stage or to have the attorney undertake the matter from the outset.

The Corporate-Side Risk Highlighted by the Supreme Court Decision of July 20, 2010

An important precedent in considering this issue is the decision of the First Petty Bench of the Supreme Court dated July 20, 2010 (Keishu Vol. 64, No. 5, p. 793). The case involved non-attorney service providers who had been retained by a building owner to negotiate with numerous tenants toward agreed termination of their leases and surrender of the premises.

The Supreme Court held that the work concerned a matter in which it was “almost inevitable” that legal disputes would arise over whether an agreement to vacate would be reached, when the tenants would vacate, and the amount of relocation compensation, and that such disputes would have to be resolved through negotiation. The Court therefore treated the matter as one concerning “other general legal matters” within the meaning of Article 72 of the Attorney Act and upheld the lower court’s finding of criminal liability under that provision.

The practical lesson for companies is that it is not enough to focus only on the party that actually engages in unauthorized legal practice. If the outsourced work itself becomes the subject of a criminal investigation or prosecution, the company that commissioned the work may also face serious consequences affecting its credibility with customers, financial institutions, investors, and other stakeholders, as well as financing, transaction execution, and reputation.

In fact, Suruga Corporation, which had outsourced tenant-vacating negotiations related to this matter, filed for civil rehabilitation proceedings in June 2008. It would not be appropriate to attribute the company’s civil rehabilitation solely to this incident. However, contemporaneous insolvency reports identified, among other factors, the loss of confidence caused by extensive reporting on the Attorney Act violations involving persons connected with the contractor, difficulty obtaining support from financial institutions, and constraints on financing as contributing to the deterioration of its liquidity. For companies, outsourcing a legal problem merely because the provider appears “cheaper,” “faster,” or “more convenient” may entail risks far greater than anticipated.

Legal Work That Should Be Performed by Attorneys Should Be Performed by Attorneys

In business practice, commercial judgment and legal judgment often form a continuum. Whether to discontinue an unprofitable transaction is a business decision. But when a contract can be terminated, under which clause, by what procedure, what risks of liquidated damages or other damages may arise, and on what terms an agreed termination should be negotiated with the counterparty are legal questions.

Similarly, analyzing a debtor’s financial condition in a debt-collection matter may fall within management or financial advisory work. By contrast, asserting the existence of a debt, negotiating the amount and timing of payment, and finalizing settlement terms are central legal functions. The same distinction applies in dealings with financial institutions: preparing a business-restructuring plan or cash-flow forecast is different in nature from representing a company in negotiations over the maturity, amount of repayment, security, guarantees, or other legal terms of existing debt.

SAKURA Law Office’s Legal Outsourcing service is designed so that companies do not have to bear the risk created by this boundary. Rather than waiting until a legal dispute has fully emerged before handing the matter to counsel, our attorneys become directly involved from the point at which legal judgment or negotiation is required, handling fact development, legal analysis, strategy, notices to counterparties, negotiation, drafting of agreements, and, where necessary, provisional remedies and litigation as one continuous process.

Principal Areas of Support

Debt Collection and Commercial Negotiations

For unpaid trade receivables, service fees, loans, and other claims, we go beyond simply issuing a demand for payment: we verify the legal basis and supporting evidence before negotiating payment amounts, payment deadlines, installment terms, security, guarantees, and settlement conditions. If voluntary negotiations do not resolve the matter, we also consider, on an integrated basis, provisional attachment, litigation, compulsory execution, and other legal procedures.

Contract Termination, Cancellation, Amendment, and Restructuring of Business Relationships

For unprofitable transactions, service agreements that have become difficult to continue, distributorships, franchise arrangements, and other continuing contracts, we analyze termination rights, non-renewal, agreed termination, damages and contractual penalties, transitional arrangements, and related issues, and we issue necessary notices and negotiate with counterparties. Our support goes beyond simply “reviewing the contract”; we help the client actually reorganize the relationship and move on to the next business decision.

Negotiations with Financial Institutions and Legal Support in Business Restructuring

In liquidity-improvement and business-restructuring situations, we work with financial and business advisers to analyze amendments to repayment terms, extensions, security and guarantees, debt waivers, and other legal conditions, and where appropriate, we negotiate with financial institutions on the client’s behalf. We clearly separate financial/accounting analysis from legal negotiation while building a structure that allows the company to manage the matter as a single project.

M&A, Investment, and Business Succession Negotiations

Working alongside M&A advisers, financial advisers, certified public accountants, tax accountants, and other professionals, we handle legal due diligence and negotiations of share purchase agreements, business transfer agreements, investment agreements, and related documents, as well as claims involving breaches of representations and warranties, indemnification, purchase price adjustments, termination, and other legal issues. By appropriately dividing responsibility for commercial terms and legal rights and obligations, we enhance both the legal soundness and execution capability of the overall transaction.

Employment, Resignation, and HR Disputes

In individual employment disputes involving resignation terms, dismissal, unpaid wages, harassment, damages, and related matters, we clarify the company’s legal position and, where appropriate, negotiate as counsel. We work with professionals responsible for HR systems and labor management while ensuring that any dispute-related component is handled by attorneys within the scope of legal practice for which attorneys bear responsibility.

Real Estate, Leasing, Tenant Vacating, and Surrender of Premises

For rent revisions, rent arrears, lease termination, tenant-vacating arrangements, surrender of premises, restoration obligations, security deposits, and other leasing matters, our attorneys handle legal analysis and counterparty negotiations while coordinating with property managers, real estate companies, asset managers, and other property-management professionals. Tenant-vacating negotiations, in particular, require careful allocation of roles in light of the unauthorized-practice risk identified by the Supreme Court decision discussed above.

Optimizing Total Legal Cost – Not Merely Finding a “Cheaper Outsource Provider”

The purpose of this service is not simply to reduce legal fees. The true cost of corporate legal work includes not only fees paid to external vendors, but also internal staff time, repeated explanations and handovers among multiple providers, delays in response, losses caused by incorrect legal judgments, legal fees incurred only after a dispute has become serious, and reputational damage.

For example, if a consultant first organizes the facts, the matter is then handed to a lawyer once a legal issue emerges in negotiations, the lawyer must reread the record from the beginning, and the case is later transferred to a different litigator, the company incurs duplicated cost and lost time at each stage. Where a matter is likely to require legal negotiation, having attorneys handle the matter consistently from the outset can reduce such double and triple costs and accelerate both decision-making and execution.

SAKURA Law Office can support not only one-off matters but also companies that face recurring or high-volume matters of the same type. After reviewing the volume of matters, workflow, and internal organization, we can propose an efficient intake and coordination structure. We distinguish between work that can appropriately be outsourced as a substitute for internal legal capacity and work that should be divided among in-house legal teams, existing outside counsel, other licensed professionals, and consultants, with the aim of creating the most rational overall structure for the company.

We Work in Collaboration with Existing Consultants and Other Professionals

Corporate problems cannot be solved by law alone. Management, accounting, tax, human resources, business restructuring, real estate, M&A, and other areas require the expertise of specialists in those fields. SAKURA Law Office does not uniformly ask clients to replace their existing external advisers. Rather, we value building the right team by preserving each adviser’s area of expertise while clearly carving out the legal analysis and representation functions that should be handled by attorneys.

We also advise companies that are already using consulting or agency services and have questions such as: “How much of this work can we safely leave with this provider?”, “The provider has already begun negotiating with the counterparty – can we continue this arrangement?”, or “At what point should we transition the matter to an attorney?” Whether a specific act violates Article 72 depends on factors including the purpose of obtaining compensation, whether the activity is conducted as a business, whether the matter qualifies as a legal matter, the specific conduct involved, and whether another statute grants authority to the person performing it. The legal characterization therefore should not be determined solely by the label attached to the service.

For Corporate Executives and Legal Department Leaders

When outsourcing legal work, companies should not decide solely on the basis of who is cheapest. They should also determine how far the outsourced work will extend into legal analysis and negotiation, whether the provider has legal authority to perform that work, and who will remain responsible for the matter through to final resolution if a dispute materializes.

SAKURA Law Office moves corporate legal matters beyond “advice” and into “execution” by having attorneys perform, under their own professional responsibility, work that only attorneys should perform. We treat legal consultation, contract drafting, notices to counterparties, negotiation, settlement, provisional relief, litigation, and enforcement as a continuous legal process and can serve as an outsourced legal function for implementing the company’s business decisions.

Companies may consult us even before a detailed outsourcing structure has been decided – for example, where a matter already outsourced to another provider needs to be transitioned to attorneys midstream, where certain negotiation-heavy matters should be externalized without increasing internal legal headcount, or where debt collection, contract termination, leasing, or other similar matters arise on a recurring basis.

Contact Us About Legal Outsourcing

For inquiries regarding the introduction of Legal Outsourcing (Corporate Legal Operations & Negotiation Support), the relationship between Article 72 of the Attorney Act and agency or consulting services currently being used, or legal negotiations involving debt collection, contract termination or amendment, employment, real estate, dealings with financial institutions, M&A, or other matters, please contact SAKURA Law Office.

To help us review your inquiry efficiently, please include, to the extent known, a brief outline of the matter, whether any outside provider or other professional is currently involved, whether negotiations with the counterparty have already begun, and whether any deadline applies.

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4F, Ark Hills South Tower, 1-4-5 Roppongi, Minato-ku, Tokyo 106-0032, Japan

TEL +81-3-6910-0692 FAX +81-3-6910-0693

Web https://sakura-lawyers.jp/en/

Managing Partner: Kenshiro Michishita