Engaging Legal Counsel in Japan: What "Junin Tetsuzuki" (Engagement Procedures) and Contractual Formalities Should Businesses Expect?

Japanese Attorney at Law - Bengoshi L.L.

• 6 min read

When a business decides to engage a Japanese lawyer (bengoshi), understanding the standard engagement procedures (junin tetsuzuki, 受任手続) and contractual formalities is essential for establishing a clear, effective, and ethically sound working relationship. Japanese legal ethics place considerable emphasis on these initial stages to protect client interests and prevent future misunderstandings. This typically culminates in a formal engagement agreement, known in Japanese as an inin keiyakusho (委任契約書).

Initial Steps: From Consultation to Case Assessment

The journey to formal engagement usually begins with initial consultations. During this phase, a prospective client will present their legal issue to the lawyer. For the lawyer, this is a critical period for:

  1. Accurate Fact-Finding: Gathering comprehensive and precise information from the client is paramount. This initial understanding forms the basis for all subsequent advice and action. Lawyers are ethically bound to make diligent efforts to understand the nuances of the client's situation.
  2. Case Outlook and Strategy Discussion: Based on the information obtained, Article 29, Paragraph 1 of Japan's Basic Rules of Professional Conduct for Lawyers (弁護士職務基本規程) requires the lawyer to provide the prospective client with an appropriate explanation of the case outlook (jiken no mitōshi, 事件の見通し), the proposed method of handling the matter (shori no hōhō, 処理の方法), and, crucially, the lawyer's fees and expenses.
  3. Ethical Constraints on Projections: While discussing the outlook, Japanese lawyers are ethically constrained. Article 29, Paragraph 2 of the Basic Rules prohibits them from guaranteeing or assuring a favorable outcome. Furthermore, Paragraph 3 forbids accepting a case by misrepresenting the prospects of success when, in reality, such prospects are negligible. These rules aim to manage client expectations realistically and prevent lawyers from taking on cases under false pretenses.

Notification of Acceptance or Refusal

Following the initial assessment, the lawyer must decide whether to accept the engagement. Article 34 of the Basic Rules of Professional Conduct (and similarly, Article 29 of the Lawyers Act) mandates that the lawyer promptly notify the prospective client of their decision—whether they will accept (junin, 受任) or decline (kyohi, 拒否) the request. This prompt notification is vital as it allows the client, if their request is declined or if they choose not to proceed, to seek alternative counsel without undue delay, which is particularly important for time-sensitive matters.

The Engagement Agreement (Inin Keiyakusho): A Cornerstone of the Relationship

Once a Japanese lawyer agrees to accept a case, the creation of a formal, written engagement agreement (inin keiyakusho) is generally a mandatory step.

  • Requirement for a Written Agreement: Article 30, Paragraph 1 of the Basic Rules of Professional Conduct explicitly states that a lawyer must create a written engagement agreement that includes matters concerning lawyer's fees when accepting a case. This requirement is reinforced by Article 5, Paragraph 2 of the Regulations Concerning Attorney's Fees (弁護士の報酬に関する規程 - JFBA Rule No. 68).
  • Purpose and Benefits: The primary purpose of the written agreement is to protect the client by ensuring clarity and transparency regarding the terms of the engagement. However, it also serves to protect the lawyer by minimizing the risk of future disputes over the scope of work, fees, or other terms. Especially in matters that may extend over a considerable period, human memory can be fallible; a written agreement provides a clear record, helping to prevent misunderstandings that could arise even with the best intentions on both sides. By clearly defining the handling policy, scope of engagement, and fee calculation methods at the outset, many potential ethical issues and client-lawyer disputes can be proactively avoided.
  • Timing: The agreement should ideally be prepared and executed when the case is formally accepted. If circumstances make immediate creation difficult (e.g., in urgent situations requiring immediate action), Article 30(1) allows for its creation as soon as the impeding circumstances cease.

Exceptions to the Written Agreement Requirement:

Article 30, Paragraph 2 of the Basic Rules (and Article 5, Paragraph 3 of the Fee Regulations) outlines exceptions where a formal written engagement agreement for each specific instance of service may not be strictly required:

  1. Legal Consultations (hōritsu sōdan, 法律相談): For one-off or brief advisory sessions.
  2. Simple Document Preparation (kan'i na shomen no sakusei, 簡易な書面の作成): For straightforward, limited tasks.
  3. Retainer Agreements / Advisory Contracts (komon keiyaku, 顧問契約) or other continuous contractual relationships: Where an overarching agreement already governs the ongoing provision of legal services.
  4. Other "Reasonable Grounds": This provides some flexibility, but its application would be context-dependent.

For businesses, while an ongoing komon keiyaku (retainer agreement) might cover general advice, engaging a lawyer for a new, substantial piece of litigation or a significant transaction would typically warrant a specific, written inin keiyakusho for that particular matter, even if a retainer relationship already exists. The retainer agreement itself should, of course, be in writing and clearly define its own scope and terms.

Essential Contents of the Engagement Agreement

The Regulations Concerning Attorney's Fees (Article 5, Paragraph 4) specify key items that must be included in the written engagement agreement:

  1. Indication and Scope of the Legal Services (junin suru hōritsu jimu no hyōji oyobi han'i, 受任する法律事務の表示及び範囲): This is arguably one of the most critical components for business clients. The agreement must clearly define what specific legal tasks the lawyer is being hired to perform. A precise definition helps prevent "scope creep" and ensures both parties have a mutual understanding of the lawyer's responsibilities.
  2. Lawyer's Fees (bengoshi hōshū, 弁護士報酬):
    • Type of Fees: (e.g., hourly rates, fixed fees, retainer fees, success/contingency fees – seikō hōshū, 成功報酬).
    • Amount or Calculation Method: Specific figures or a clear methodology for how fees will be calculated.
    • Payment Timing: When and how fees are to be paid.
  3. Termination Clause (inin keiyaku no kaijo, 委任契約の解除): A statement affirming that the client (and the lawyer, under certain conditions) can terminate the engagement agreement before the conclusion of the matter.
  4. Settlement upon Mid-Term Termination (chūto de shūryō shita baai no seisan hōhō, 中途で終了した場合の清算方法): The method for calculating and settling fees and outstanding expenses if the engagement is terminated before the matter is fully resolved. This helps avoid disputes over fees for work already performed if the relationship ends prematurely.

Explanation of Fees and Expenses

Beyond inclusion in the written agreement, Article 29, Paragraph 1 of the Basic Rules requires lawyers to provide an "appropriate explanation" (tekisetsu na setsumei, 適切な説明) of their fees (hōshū) and anticipated expenses (hiyō, 費用) at the time of engagement.

For businesses, this means they should expect a clear breakdown of the fee structure. Common fee arrangements in Japan for corporate matters include:

  • Time Charges (Hourly Rates): Increasingly common, especially for complex advisory work or international matters.
  • Retainer Fees (komon-ryō, 顧問料): For ongoing legal advice and support, typically paid monthly.
  • Fixed Fees: For specific, well-defined tasks or stages of litigation.
  • Success Fees (seikō hōshū): Often used in litigation, where a portion of the fee is contingent upon achieving a successful outcome. This usually involves an initial engagement fee (chakushu-kin, 着手金) plus a success fee calculated based on the economic benefit obtained.

Prospective clients also have the right to request a fee estimate (hōshū mitsumorisho, 報酬見積書), and lawyers are encouraged to provide one (Regulations Concerning Attorney's Fees, Art. 4).

Practical Implications for Businesses

When engaging Japanese legal counsel, businesses should:

  • Insist on a Written Agreement: For any substantial or specific matter, always ensure a clear, written inin keiyakusho is executed, even if an overarching retainer agreement is in place.
  • Scrutinize the Scope of Work: Pay close attention to how the scope of services is defined. Ensure it accurately reflects the company's needs and expectations to prevent future disagreements.
  • Understand the Fee Structure: Discuss fee arrangements thoroughly. If hourly rates are used, understand what activities are billable. If success fees are involved, ensure the definition of "success" and the calculation method are unambiguous. Request fee estimates for budget planning.
  • Clarify Termination Provisions: Understand the conditions under which either party can terminate the engagement and, importantly, how fees and expenses will be calculated and settled if the relationship ends before the matter's natural conclusion.
  • Maintain Open Communication: While the formal agreement is crucial, ongoing communication regarding case progress, strategy, and any potential changes to the scope or anticipated costs is key to a healthy lawyer-client relationship.

A Note on U.S. Engagement Practices

The Japanese emphasis on written engagement agreements, particularly the detailed content requirements, aligns with best practices globally and shares similarities with U.S. approaches. For instance, ABA Model Rule 1.5(b) states that the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation. The Japanese Basic Rules, however, arguably create a more explicit requirement for a written agreement for specific case engagements, rather than just a preference.

Conclusion

The formal engagement procedures adopted by Japanese lawyers, centered around a comprehensive written engagement agreement (inin keiyakusho), are not mere bureaucratic hurdles. They are ethically mandated practices designed to foster clarity, manage expectations, and protect the interests of both the client and the lawyer. For businesses, particularly those new to the Japanese legal environment, understanding and actively participating in these formalities—ensuring clear definitions of scope, transparent fee structures, and mutually understood terms—is fundamental to building a strong foundation for successful legal representation in Japan. These procedures underscore the Japanese legal profession's commitment to professionalism and client protection from the very outset of the relationship.