When discussion of bribery and corrupt business practices comes up, it’s common to think of China and Russia, and the high profile investigations in telecommunications, defense, pharmaceuticals and manufacturing industries.
Japan, by comparison, has seen relatively few DOJ and SEC investigations of Japanese companies under the Foreign Corrupt Practices Act (FCPA) in recent years, but the number continues to grow, as US federal agencies increase enforcement efforts. A historically hands off approach by the Japanese government toward enforcement of anti-bribery laws is giving way to greater awareness and compliance. U.S. anti-corruption laws can be used to prosecute misconduct occurring in Japan, the United States, and even other countries—highlighting the need for multinational companies to ensure that they have robust compliance policies and programs in place around the globe.
An article by Hogan Lovells in Lexology reported that in July 2016, the Japanese Federation of Bar Associations (JFBA) published new guidelines on foreign bribery prevention, called “JFBA Guidelines”. The guidelines offer recommendations for corporations to ensure compliance with Japan’s Unfair Competition Prevention Act (UCPA), as well as the United States’ Foreign Corrupt Practices Act.
The process of eDiscovery in FCPA cases, which often involves both criminal and civil phases, is complicated by curious and interesting puzzle of cultural, legal, and technological differences between Japan and the U.S. As an American lawyer who migrated to Japan to gain experience in cross-border litigation, I have had the unique opportunity of being exposed to both sides of a U.S. investigation into Japanese business behaviors. In this post I’d like to share some perspective from the FCPA cases I have managed in Japan as an eDiscovery review manager, and a few tips on eDiscovery workflow and management to achieve the best results while controlling costs.
First it’s important to understand the differences in the legal systems of the two countries. Japan is not a highly litigious society, and the legal services industry has, in many ways, avoided the corporatization of the American legal industry, with 78% of attorneys working in firms of 10 attorneys or less. In Japan there are 287 attorneys per one million people in Japan, compared with 3,769 attorneys per million people in the U.S., according to a 2016 Wall Street Journal report. This is, in part, due to the lack of an adversarial discovery process – discovery in Japan is directed by the Judge, and not the parties. However, in cases where Japanese companies conduct business activities that touch upon the United States stream of commerce, thus subjecting them to American jurisdiction, they quickly find that the American discovery system is far different. Japanese in-house counsel is often surprised at the scope and expense, and formality of the American discovery process, as well as the danger that their confidential business documents and strategies might be shared with a competitor, often in the same industry. Care must be taken to counsel the client on concepts like confidentiality, to process of collection, obligations of legal holds, and other discovery concepts that may be more familiar to an American company’s in-house team.
In the U.S. there is an orientation toward gathering and reviewing documents very broadly, with an aim to understand all the context about the individuals, events and information in the case. In the Japanese system, the judge has broad control over all proceedings, and there is a more focused goal to review and produce only the minimum number of documents needed to support the facts. On FCPA investigations in Japan, FRONTEO works closely with the law firm and client to help them understand both the discovery and eDiscovery process so they can make appropriate decisions about reviewing and producing documents.
To further complicate discovery, the concept of attorney-client privilege as we know it in the U.S. does not really exist in Japan. In the U.S., communications with attorneys for the purpose of seeking legal advice are privileged and usually protected from disclosure, and the ‘privilege’ belongs to the client, with the possibility of waiver if disclosed to third parties. Japan has amended its code of civil procedure to provide for the obligation of attorneys to keep their client’s secrets, but there is no codification of the formal concept of “privilege.” Thus, Japanese attorneys without experience in American litigation are not familiar with our tests for “privilege” and “work-product” which are generally quite familiar to American attorneys. When relying on Japanese attorneys for tasks like document review, it is essential to go over these concepts to ensure a quality review.
Last but not least are the challenges of language. DOJ and SEC enforcement actions under FCPA or antitrust cases typically involve multinational corporations doing business across the globe. So document collections in these cases are most often a mix of multiple languages including Japanese, English, and perhaps other languages. This is representative of the normal mode of communications between subsidiaries, suppliers, sales channels and customers across global regions. The choice of workflows for dealing with these documents (e.g. requiring all documents to be reviewed by a bilingual team, conducting concurrent English/Japanese reviews, workflow for translations etc.) can be very complex and costly if not considered before the start of review.
All of these challenges posed by language, culture and legal concepts in Japan can be daunting. FRONTEO itself is a Japanese company with global operations, and as such we are well versed in cross-border eDiscovery.
In light of the complexities outlined above, I offer the following considerations and recommendations for optimizing workflow and tools in the eDiscovery process for FCPA cases particularly, but most of these comments apply generally to cross-border cases of all kinds:
Our mission at FRONTEO is to work in partnership with U.S. litigation counsel and local corporate in-house legal to efficiently manage eDiscovery for cases of all kinds, including compliance with FCPA investigations. For readers who are interested in delving further into eDiscovery between US and Japanese companies, I recommend the book by Masahiro Morimoto, founder and CEO of FRONTEO, Inc. entitled “eDiscovery – Japan: A Pathway for U.S. Attorneys to Do Business with Asian Corporations,”.
The book describes how a Japanese-centric eDiscovery service provider can add value, especially in promoting good working relationships between US attorneys and their Japanese clients. With increasing globalization, the book is timely and helpful for multinational companies seeking effective methods of managing US litigation cases.