Legal News

Toyota Lawsuits Not so Big in Japan, But That Might Be Changing

By Ashby Jones

Anyone paying close attention to the Toyota situation will likely have his television dialed into C-SPAN today to watch the hearings, at which, we’d imagine, members of the House Energy and Commerce Committee will have some fairly pointed questions for James Lentz, Toyota’s U.S. chief of sales. Repping Lentz and Toyota at the hearing: King & Spalding’s Ted Hester. Click here for the WSJ story previewing the hearings.

Over in Japan, meanwhile, pressure on the company is perhaps a bit less intense than it is in the U.S. That’s because in Japan, Toyota is largely shielded from lawsuits and regulatory action by rules and customs more deferential to manufacturers. Click here for the WSJ story on the relative quietude on the eastern front.

According to the WSJ’s Yuka Hayashi, Japanese courts rarely award punitive damages beyond compensatory damages. Furthermore, class-action suits are rare in Japan, where proving connections between individual cases is tougher than in the U.S. So far in Japan, no lawsuit has been filed against Toyota related to the latest recall here, in which it recalled 223,000 vehicles of the Prius and other hybrid models to fix the control program for their brake systems.

“In the U.S., you can go after a company citing anxiety caused by a faulty product,” says Tadashi Nakamura, a Tokyo lawyer familiar with auto recall issues. “In Japan, you have to prove the actual loss, and getting compensated for it is very difficult.”

That said, Japanese lawyers may be toughening up. Deregulation in the past several years has spurred more competition among lawyers in Japan, sending some to solicit customers aggressively. The growing creation of law schools modeled after U.S. institutions and a change in the bar exam system have allowed the number of lawyers in Japan to soar. And lifting of a ban on legal advertisement and mergers and acquisition have paved the way for the emergence of giant law firms with hundreds of lawyers.

Currently, 29,000 lawyers practice in Japan, up 68% from 2000. That compares to 1.18 million active attorneys in the U.S. last year. The number of civil cases filed in Japan, meanwhile, totaled 235,509 during 2009, up 73% from five years earlier.

While Japanese lawyers don’t expect the Toyota recall to create a boom in lawsuits, some are scrutinizing it for potential business opportunities.

Yukito Ishimaru, a 37-year-old lawyer who made a name for himself by going after consumer lenders for overcharging interest, thinks the Prius recall could result in “a fair number” of lawsuits seeking compensation for damages.

“Competition is boosting the quality of services and lowering prices of legal service in Japan,” says Ishimaru, who wants to beef up his firms’ businesses in traffic accidents and immigration services. “We are finally beginning to look like a normal industry.”

Full post as published by Law Blog - WSJ.com on February 23, 2010 (boomark / email).