International law firms in Japan might have taken a big hit over the past two years when their Japanese clients, cowed by COVID, put outbound M&A deals on hold and plunged Japan’s outbound M&A activity to its lowest level in 20 years.
Instead, many of those firms shifted gears along with their clients. And even as COVID fears subside, this change has given them new avenues for growth.
While outbound M&A work—the bread and butter of many international firms—dried up, law firms seized on opportunities that arose with an uptick in inbound investments by private equity firms and tech companies, with the divestiture of non-core assets by Japanese corporates, and with an increase in cross-border antitrust filings. For many, the silver lining of COVID has been a broadening of their offerings in Japan.
Firms such as Herbert Smith Freehills, Skadden, Arps, Slate, Meagher & Flom and K&L Gates, which built up practices in Tokyo advising Japanese companies on outbound M&A transactions, saw their Japanese clients suspend their overseas M&A plans—hesitant to pursue them because Japanese corporates generally prefer to do face-to-face meetings and onsite due diligence—activities that have been almost impossible over the past two years.
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