Accelerating Innovation Through Legal and PR Collaboration

In recent years, companies increasingly need to engage in shaping new market rules, such as promoting legal frameworks, to foster innovation.

This time, Ken Nagahama of Dentsu Inc. Public Relations spoke with Attorney Yu Mizuno of City Lights Law Office. Attorney Mizuno advocates for the importance of leveraging legal expertise in corporate rule-making under the concepts of "strategic legal affairs" and "rule-making thinking." He delves into "how strategic legal affairs and rule-making should be utilized to drive corporate innovation" and "how to collaborate with legal departments and leverage public relations."

 

Generally, laws and contracts are often perceived as obstacles to progress. Moreover, in this complex and rapidly changing era, laws become outdated quickly, leading to broader interpretations.

However, can't law also be used as a tool to guide and accelerate things and society in a positive direction? I propose this concept of "legal design."

This concept isn't limited to simple legislation or legal amendments. It also encompasses the approach taken by startups and new ventures within large corporations: creating business opportunities within legal gray areas—where laws aren't explicitly defined—by engaging in dialogue with society, including government agencies.

The interpretation imposed by "the powers that be" is not necessarily the only valid one. We now live in an era where it is possible to change the rules through public outreach, dialogue with government, and the logic of legal interpretation.

Today, there are people within government and administration who share a sense of crisis, recognizing that "the current rules are inadequate." By collaborating with these government and administrative officials, individuals who identify problems and challenges in the existing rules through their on-the-ground challenges can enable bottom-up rule formation. This is the approach I propose.

The Need to Balance Vision and Logic

In the legal departments of typical Japanese companies, it is common to examine the prevailing legal opinions, existing court precedents, and case law under current law. If a business venture contradicts these or raises doubts, it is often deemed unfeasible. Merely because of legal uncertainty, business ideas are often easily nipped in the bud under the banner of "compliance" or similar slogans.

However, foreign-affiliated startups fundamentally recognize that "rules become outdated." They understand that to realize their vision, they must change the rules. Therefore, regarding current laws, they thoroughly examine with internal and external experts not whether a certain interpretation "holds up," but whether a new interpretation "could hold up" considering the changing times within their business ideas.

In other words, they operate on the premise that legal interpretations and rules should be suited to the prevailing environment. This is why I often say "vision and logic must run parallel."

In the US, media scrutiny is even more intense than in Japan, and companies can face backlash or class-action lawsuits. However, even if sued, because they have carefully built a solid logic within existing laws, it takes 2-3 years for a case to reach the Supreme Court.

The crucial task during this period is not only to expand market share but also to engage in broad PR activities to shape public opinion. By communicating the social significance of the company's vision, the goal is to reach a settlement or influence legal reform before the final judgment. By that time, market share has been secured. This is executed according to a detailed schedule.

The PR referred to here extends beyond media relations to encompass pure public relations targeting a broad range of stakeholders. In today's era, legal elements are increasingly integrated into this as well.

In court filings by foreign companies, the introductory sections preceding the core legal arguments can be exceptionally lengthy. While court documents serve as tools to persuade judges, they also read as messages intended for the public, written with the expectation of being made public. This reveals a perspective that views litigation as an opportunity to raise public awareness.

As mentioned earlier, the US is a litigious society, so this field of Litigation PR is more developed there than in Japan.

Furthermore, rather than separating legal work into the "pre-litigation" preventive measures and "post-litigation" dispute resolution that were previously mainstream in Japan, a strategic approach that views these as an integrated whole is gaining increasing importance.

A statement made by a corporate legal head I met previously is highly symbolic. Within that company, legal is referred to as an "Enable Function." In other words, it serves as a function that enables business operations.

Based on discussions at a study group, I define this strategic legal function as "the work of supporting or shaping management strategy from a legal perspective to ensure a company's innovative and sustainable growth." It encompasses a broad concept, including intellectual property strategy, business compliance checks, legal opinions, lobbying, and government relations.

What Strategic Legal Affairs Enables

While logic is certainly important in strategic legal affairs, a more critical perspective focuses on whether there is "a new value or vision that can be presented to society" and whether the company is "healthy, sustainable, and viable as a 21st-century enterprise."

Logic is merely a means to achieve the end; without a clear vision as the purpose, both the logic and the vision can be blown away when facing headwinds like media criticism or litigation. Therefore, I wish to reiterate that vision is crucial, even from a legal perspective.

While it may seem that legal affairs are not responsible for supporting the construction of a corporate vision, I believe legal departments should actively engage in building ethical, sound, and sustainable visions and corporate values.

In Japanese companies, the legal department is often seen as a position to consult when something goes wrong. However, isn't the time coming to change this passive stance?

In recent years, the structure of policy formation, traditionally dominated by a four-way dynamic involving government, media, industry associations, and NPOs/NGOs, has diversified. Within this context, the shift "from lobbying to GR (Government Relations) and PA (Public Affairs)" is frequently discussed.

Some foreign companies have established public policy teams, departments focused on public policy and government relations. These teams are composed of a broad range of personnel, including not only legal professionals but also lobbyists, PR specialists, and corporate planning staff, serving as hubs for various projects. Recently, a significant number of companies in Japan have also begun establishing public policy teams.

The gray areas in legal interpretation are where current societal challenges are most evident. Addressing these areas presents an opportunity to solve societal issues, and it is precisely this role that these professionals undertake.

Today, we need more than just closed-door lobbying or media relations. We need genuine public relations and public affairs—approaches that involve diverse stakeholders through open processes.

 

Indeed, Attorney Mizuno's insights—as a lawyer involved in numerous rule-making processes as part of corporate management strategy—presented compelling perspectives crucial for Japanese companies expanding their operations not only domestically but also internationally.

It seems clear that achieving strategic legal affairs for companies requires initiatives in public relations and public affairs.

Dentsu Inc. Public Relations has established a dedicated Public Affairs department to support companies. In today's environment, where technology evolves rapidly, creating gaps between laws and reality—the so-called gray zones—the following three points demand attention:

① The necessity of gathering information on policy trends

To formulate and advance business strategies in this environment, it is essential to grasp major global trends, investigate the current state of the Japanese government and stakeholders, and fully understand their characteristics to develop effective strategies.

Specifically, this requires analyzing publicly available government materials and meeting with politicians and bureaucrats to grasp the direction of policy formation.

Changes in Japan's legal system are also influenced by developments in the US and Europe. Grasping the currents of discussion among policy stakeholders in Washington D.C., Brussels, and other locations will also aid in predicting the future direction of Japanese policy.

Furthermore, NPO activities often underpin the strengthening of international regulations targeting corporations. Within Japan, academics also frequently play significant roles in advancing policies. It becomes necessary to provide opportunities for dialogue with a broad range of stakeholders, including NPOs and academics, to foster deeper understanding.

② Establishing a Vision and the Importance of Communicating It Internally and Externally

When proactively developing and promoting initiatives where legal frameworks have yet to catch up, it is crucial to communicate a vision and build societal empathy for the company's endeavors.

For startups or other organizations lacking a vision, it is necessary to create a new vision based on interviews with top management and external stakeholders, or through internal workshops.

Demonstrating the company's social value is particularly crucial when making proposals to policymakers and the media. Creating a vision offers an excellent opportunity to re-examine the company's initiatives from a societal perspective.

Alongside the vision creation process, internal communication to embed it within the company is vital. Tools like posters and internal newsletters, along with fostering dialogue through small meetings, can help achieve this internal penetration.

Furthermore, external communication of the vision is essential. Leveraging opportunities like media interviews with top management, and mentioning the vision alongside specific management strategies and initiatives, enables its persuasive communication.

Similarly, presentations by top management at business launch events or conventions provide excellent opportunities to communicate the vision externally. Creating presentation slides based on a storyline allows the vision, management strategy, and initiatives to be presented as a cohesive narrative. Posting this information on the company website is also effective for providing access to stakeholders.

③ Accelerating innovation requires collaboration between legal and communications

Collaboration between legal and communications is key to proposing and establishing new rules within society. This requires both public relations activities to gain societal understanding of the necessity to solve social issues through the company's business, and activities by the legal department using legal design thinking. As mentioned in Professor Mizuno's talk, some leading companies have departments like a "Public Policy Division" that combines both legal and communications functions.

For effective collaboration between legal and PR, it is necessary to develop a unified strategy regarding the target audience, messages, and timing for information dissemination, and to ensure sufficient internal coordination. The prerequisite for this is an accurate understanding of stakeholders. This involves grasping the perspectives of policymakers and experts, monitoring media discourse, and, when necessary, researching public receptivity to policies.

Furthermore, to convey messages persuasively, supporting objective evidence is crucial. Evidence primarily falls into three categories: "data," "cases (examples)," and "voices (stakeholder perspectives)."

Our research indicates that approximately 80% of Diet members seek policy proposals grounded in objective evidence like data. Providing similar evidence to media representatives is also advisable. Utilizing such objective data enables the creation of highly persuasive explanatory materials.

To achieve public affairs at a higher level, moving beyond petition-style lobbying, it is crucial to gain broad understanding of policy necessity based on social value. Such efforts enable the creation of an environment conducive to the company's business development.