Conflict of Interest in Japan: How Do Japanese Law Firms Screen for "Rieki-Sohan" and What Should Foreign Companies Know?

Japanese Attorney at Law - Bengoshi L.L.

30 May 2025 • 9 min read

Engaging legal counsel in a foreign jurisdiction invariably involves navigating a distinct set of professional ethics and rules. For businesses operating in Japan, or those considering it, understanding how Japanese lawyers (bengoshi) and their firms manage conflicts of interest—known as rieki-sōhan (利益相反)—is a critical aspect of risk management and ensuring effective legal representation. The Japanese legal profession places significant emphasis on avoiding and managing such conflicts, underpinned by both statutory law and detailed professional conduct rules.

The Foundation of Conflict of Interest Rules in Japan

The primary legal framework governing conflicts of interest for Japanese lawyers is found in the Lawyers Act (弁護士法, Bengoshi Hō) and the Basic Rules of Professional Conduct for Lawyers (弁護士職務基本規程, Bengoshi Shokumu Kihon Kitei), promulgated by the Japan Federation of Bar Associations (JFBA).

Specifically:

Lawyers Act, Article 25: This article lists nine specific situations in which a lawyer cannot perform their duties due to a conflict.
Basic Rules of Professional Conduct, Article 27: This rule largely mirrors Article 25 of the Lawyers Act, detailing circumstances where a lawyer is prohibited from acting.
Basic Rules of Professional Conduct, Article 28: This rule extends the prohibitions to additional scenarios not explicitly covered by the Lawyers Act, often allowing for exceptions if informed consent is obtained from the relevant parties.

The rationale behind these stringent rules is generally understood to be threefold:

Protection of Client Interests: To ensure that a client receives undivided loyalty and that their confidential information is safeguarded.
Ensuring Fairness in the Lawyer's Performance of Duties: To maintain the lawyer's objectivity and prevent their professional judgment from being compromised.
Maintaining the Dignity and Credibility of the Legal Profession: To uphold public trust in lawyers and the legal system.

When applying these rules, the term "case" or "matter" (jiken, 事件) is interpreted broadly, focusing on the substantive scope of potentially conflicting interests rather than merely the formal subject matter of litigation or procedural similarity. "Duties" (shokumu, 職務) encompass the general legal affairs a lawyer undertakes.

Key Types of Conflicts of Interest in Japan

Japanese conflict rules address various scenarios, including simultaneous representation of adverse interests, conflicts involving former clients, and situations where the lawyer's personal interests clash with those of a client.

1. Conflicts Involving Current Clients:

Representing Opposing Sides in the Same Matter: A lawyer cannot represent the opposing party in a matter where they have already been engaged by one party. This is a fundamental prohibition, and client consent generally cannot waive this type of direct, concurrent conflict in the same case.
Acting Against a Current Client in an Unrelated Matter: A lawyer is generally prohibited from undertaking a new matter where the opposing party is one of their existing clients, even if the new matter is unrelated to the existing client's representation. Similarly, a lawyer cannot act against a party with whom they have a continuous legal service agreement (such as a retainer agreement). However, Article 28, Item 2 of the Basic Rules allows for this type of representation if both the existing client and the prospective new client (who would be adverse to the existing client in the new matter) provide informed consent.
Accepting a Case from the Opposing Party of a Current Client (in an Unrelated Matter): If a lawyer is representing Client A in Matter X, they cannot then accept representation of Client B, who is the opposing party to Client A in an unrelated Matter Y, unless Client A (the existing client) consents. This is covered by Article 27, Item 3 of the Basic Rules.
Conflicting Interests Among Multiple Current Clients: If a lawyer represents multiple clients whose interests are, or are likely to become, directly adverse in a particular matter, this creates a conflict. Article 28, Item 3 of the Basic Rules prohibits such representation unless all affected clients give informed consent.

2. Conflicts Involving Former Clients or Prior Consultations:

These situations are particularly sensitive due to the lawyer's continuing duty of confidentiality to former clients and the trust placed in them during initial consultations.

Acting Against a Former Client in the Same or Substantially Related Matter: A lawyer is prohibited from acting for a new client against a former client in the same matter in which they previously "consulted and assisted" (kyōgi o ukete sanjo shi) the former client, or in a matter where they accepted the former client's engagement. This is a strict prohibition under Article 27, Item 1 of the Basic Rules (and Lawyers Act Art. 25(1)) and is generally not waivable by consent. The scope of "assisted" implies a degree of active support or advice.
Prior Consultation with the Now-Opposing Party: Even if no formal engagement occurred, a lawyer cannot act in a matter if they previously "consulted" (kyōgi o uketa) with the now-opposing party, and that consultation was of such "extent and method" that it was "based on a relationship of trust" (shinrai kankei ni motozuku). This prohibition, under Article 27, Item 2 (and Lawyers Act Art. 25(2)), is also generally non-waivable. This rule aims to protect individuals who disclose confidential information during an initial consultation with the expectation of potential representation.
- The "relationship of trust" is a key determinant. A brief, general inquiry might not trigger this rule, but a detailed discussion where sensitive information is shared likely would.
- This area can give rise to the problem of tsuba-tsuke (唾付け, literally "to apply saliva," meaning to mark something as one's own) or fūjikome (封じ込め, "containment" or "blocking"). This refers to a tactic where a party might consult with multiple capable lawyers about a matter, without intending to retain them all, simply to create a conflict that would prevent those lawyers from representing the opposing side. While such bad-faith consultations might not be deemed "based on a relationship of trust," proving the intent can be difficult for the lawyer.

3. Lawyer's Personal Interests and Relationships:

Conflict with Lawyer's Own Economic Interests: A lawyer cannot undertake a matter if the client's interests conflict with the lawyer's own economic interests, unless the client gives informed consent. This is stipulated in Article 28, Item 4 of the Basic Rules. The limitation to "economic" interests has been critiqued, as other personal interests could also impair a lawyer's judgment or loyalty.
Opposing Party is a Close Relative: If the opposing party is the lawyer's spouse, direct blood relative, sibling, or a cohabiting relative, the lawyer generally cannot take the case, unless the client, knowing this relationship, consents. (Basic Rules, Art. 28, Item 1).

Imputed Disqualification: The "One Firm, One Client" Principle

A crucial aspect of Japanese conflict of interest rules, particularly relevant for firms of all sizes, is the principle of imputed disqualification. Generally, if one lawyer in a law firm is conflicted out of a matter, that conflict is imputed to all other lawyers in the firm.

Joint Law Offices (Kyōdō Jimusho): Article 57 of the Basic Rules states that if a lawyer in a joint law office is prohibited from handling a case due to Articles 27 or 28, then other lawyers in that same office are also prohibited from handling that case.
Lawyer Corporations (Bengoshi Hōjin): Similar rules apply to lawyer corporations (Basic Rules, Art. 64, 65).

This imputation aims to protect client confidences and ensure undivided loyalty, recognizing that lawyers within a firm may share information or be influenced by each other's engagements.

The Exception: "Grounds for Maintaining Fairness of Duties" & Ethical Screens

The rule of imputed disqualification is not absolute. Article 57 (and its counterparts for lawyer corporations) provides an important exception: the prohibition does not apply if there are "grounds on which the fairness of duties can be maintained" (shokumu no kōsei o tamochiuru jiyū).

What constitutes such grounds is a matter of comprehensive, case-by-case assessment. Key factors include:

The nature and extent of the conflict.
The risk of confidential information being shared or misused.
The consent of the affected client(s) after full disclosure.
Crucially, the implementation of effective information screening measures within the firm, often referred to as "Chinese Walls" or, more neutrally, "ethical screens" (jimusho-nai jōhō shadansochi).

An effective ethical screen typically involves:

Physical and electronic separation of the conflicted lawyer(s) from those handling the matter.
Prohibitions on discussing the matter with the screened lawyer(s).
Restricted access to case files (both physical and electronic).
Written undertakings by firm members to abide by the screen.
Notification to the affected client(s) about the screen.

While ethical screens are recognized as a potential basis for overcoming imputed disqualification, their definition and the requisite level of thoroughness are still evolving in Japanese practice. Their effectiveness is sometimes debated, especially in smaller firms where complete separation can be challenging.

How Japanese Law Firms Screen for Conflicts (Junin Shinsa)

Given these rules, robust conflict-checking (junin shinsa, 受任審査 – literally, "case acceptance examination") is a fundamental operational requirement for Japanese law firms.

Process:

Database Check: New matters (clients, opposing parties, related parties, subject matter) are checked against a comprehensive firm database of past and present engagements and consultations. Article 59 of the Basic Rules encourages firms to maintain such records.
Internal Circulation: Details of a potential new matter are often circulated to all lawyers within the firm (e.g., via email) for individual review, as databases may not capture every nuance or the most recent interactions. This circulation usually includes names of parties, a brief description of the matter, the nature of the potential conflict, and other relevant background information.
Assessment and Discussion: If a potential conflict is identified, the relevant lawyers, and often a designated conflicts partner or committee, will analyze the situation based on the Lawyers Act and Basic Rules. This involves determining the type of conflict, whether it's waivable, and what measures (consent, screening) might be necessary.
Client Communication: If a conflict is waivable with consent, full disclosure is made to the affected client(s) to obtain their informed agreement. If an ethical screen is to be implemented, clients are typically informed of this.

Challenges in Screening:

Speed vs. Accuracy: Conflict checks must be thorough but also conducted swiftly, especially for urgent matters.
Confidentiality of Prospective Client Information: When circulating details of a potential new matter internally for conflict checking, firms must be careful about how much sensitive information about the prospective client is shared, balancing the need for an accurate check with confidentiality.
Defining the "Client" and "Matter": For corporate groups, identifying all relevant entities for conflict purposes can be complex. Similarly, determining if a new matter is "substantially related" to a past one requires careful judgment.

As noted, some conflicts are waivable with informed consent from the affected client(s), while others (typically direct adversity in the same matter or certain former client conflicts) are not.

For consent to be valid, the client must be provided with sufficient information about the nature of the conflict and its potential implications, allowing them to make a truly informed decision.
Obtaining consent is a serious matter, and lawyers must ensure that the client's agreement is genuinely voluntary and not a result of pressure or insufficient understanding.

Specific Considerations for Foreign Companies

When foreign companies engage Japanese counsel, several aspects of the conflict of interest regime warrant particular attention:

Defining the "Client" in Corporate Groups: It is crucial to clarify with Japanese counsel which entities within a multinational corporate group are considered the "client" for conflict purposes. Representation of a subsidiary might, under certain circumstances, create conflicts with respect to the parent company or other affiliates, especially if their interests diverge or if confidential information relevant to the entire group is shared.
Breadth of "Case/Matter" Definition: The Japanese interpretation of what constitutes the "same case" or a "related case" can be broad. Foreign companies should provide comprehensive information about the background and scope of their legal needs to enable a thorough conflict check.
Proactive Disclosure: Foreign companies should proactively disclose to their prospective Japanese counsel any existing or past legal representation by other firms (in Japan or elsewhere) that might involve parties or issues relevant to the new engagement. This helps the Japanese firm conduct a more effective conflict search.
Understanding Waiver Limitations: It's important to understand that not all conflicts can be waived by consent in Japan. Unlike some U.S. jurisdictions where sophisticated clients might have more latitude to waive certain conflicts, some Japanese rules are absolute.
Transnational Firms and Imputed Disqualification: If a foreign company is working with a global law firm that has an office in Japan, conflicts arising in other offices of the firm could potentially be imputed to the Japanese office, subject to the effectiveness of any ethical screens implemented across the firm. The Japanese rules on imputed disqualification for joint offices and lawyer corporations will apply to the Japanese entity.

Consequences of Breaching Conflict Rules

Violating conflict of interest rules can have serious consequences for Japanese lawyers and their firms:

Disciplinary Action: The most common consequence is disciplinary action by the lawyer's bar association, which can range from a reprimand to suspension or even disbarment.
Invalidation of Lawyer's Actions: In some limited circumstances, actions taken by a lawyer in breach of certain conflict rules (like those under Lawyers Act Art. 25) might be subject to challenge or nullification in court, particularly if a timely objection is raised by the affected party. The Supreme Court of Japan ruled on October 30, 1963, that an opposing party can object to a lawyer's procedural acts that violate Article 25 and request the court to exclude them, though failure to object in a timely manner may result in the acts becoming effective.
Reputational Damage: Conflict breaches can severely damage the reputation of the lawyer and the firm.
Civil Liability: While less common, a lawyer might face a civil claim for damages if a conflict of interest leads to demonstrable harm to a client.

Conclusion

Japan's rules on conflicts of interest for lawyers are comprehensive and reflect a strong commitment to protecting client interests and the integrity of the legal profession. They demand a high degree of vigilance from both individual lawyers and law firms in identifying and managing potential rieki-sōhan. For foreign companies, understanding these rules and engaging transparently with their Japanese counsel about their corporate structure, existing relationships, and the specifics of the matter at hand is essential. This proactive approach will help ensure that potential conflicts are identified early and managed appropriately, paving the way for a relationship of trust and effective legal representation in Japan. The emphasis on thorough screening, the nuanced application of imputed disqualification, and the careful consideration of when client consent can resolve a conflict are all key features of this robust system.