Japan’s legal market is undergoing a transformation that could reshape the global legal landscape — with skyrocketing demand, international opportunities, and a perfect place for the bold embrace of GenAI, Japan is becoming a proving ground for the future of legal services
Across the globe, the large law industry is currently experiencing one of its most dynamic periods in recent history. The pandemic and subsequent post-pandemic eras have caused law firms to face rapidly rising costs, an increasingly unstable global economy, and a technological revolution that is as promising as it is disruptive. In such turbulent times, it can be challenging to identify genuine opportunities amid the struggle to maintain stability.
Nevertheless, there is a region where significant change is underfoot that could provide valuable lessons for law firms around the world, whether they are large global entities or boutique midsize firms — Japan.
The Thomson Reuters Institute’s latest report, General Counsel Trends Driving Japan’s Legal Market in 2025, offers a rare and timely look into a legal market that is not only growing rapidly but also is evolving in ways that could foreshadow broader global trends. Based on in-depth interviews with general counsel and senior legal decision-makers at major Japanese corporations, the report reveals a market that is both uniquely Japanese and strikingly global in its trajectory.
A market on the move
Like in many legal markets around the world, Japan’s legal industry is undergoing a transformation. Once known for its conservative approach to legal services and a cultural preference for informal dispute resolution, the country is now seeing a surge in legal demand — particularly for international work. In fact, Japanese companies with more than $1 billion in annual revenue now allocate nearly half of their legal budgets to matters outside Japan.
This internationalization is not just a trend — it’s a structural shift. The number of Japanese companies with overseas legal needs has grown to 90% from 74% over the past decade. And with that growth comes opportunity, both for domestic firms to expand their capabilities and for international firms to gain a stronger foothold in a market that has traditionally been difficult to penetrate.
Yet, this growth is not without its challenges, as the report shows. Japan’s legal sector is grappling with a familiar but acute issue — a shortage of qualified legal professionals. As demand rises, firms are struggling to scale; and this has opened the door for international firms, particularly those with strong M&A and regulatory practices, to step in and support those Japanese clients with global ambitions.
The report also highlights how general counsel in Japan are increasingly prioritizing outside law firms with broad service offerings and global reach. While trust and relationships remain important, the ability to deliver across jurisdictions is becoming a key differentiator for many Japan-based law firms.
GenAI: A further catalyst for change
Perhaps the most intriguing aspect of Japan’s legal evolution is its potential role as a proving ground for the use of generative AI (GenAI) in legal services. With its deep-rooted culture of technological innovation and a pressing need to boost capacity, Japan is uniquely positioned to lead in the adoption of AI-driven legal solutions and tools.
Japanese law firms are already embracing technologies like e-discovery and automation, and many see GenAI as a way to not only alleviate staffing pressures but also to leapfrog into a new era of legal service delivery. Whether this will help domestic firms reclaim market share from international competitors — or further accelerate the latter’s rise — remains to be seen.
What makes Japan’s legal market so compelling is not just its growth, but its potential to serve as a bellwether for the global industry. The interplay of internationalization, capacity constraints, and technological disruption is not unique to Japan — but the way these forces are converging there is.
As the report shows, for law firms around the world, understanding what’s happening in Japan isn’t just interesting — it’s instructive. The strategies that succeed (or fail) in this high-pressure, high-opportunity environment could offer a preview of what’s to come elsewhere.
You can explore these insights in more detail by downloading a full copy of the Thomson Reuters Institute’s “General Counsel Trends Driving Japan’s Legal Market in 2025” in English or in Japanese here
