Allen & Overy (A&O) is conducting a wholesale strategic review of its underperforming Tokyo office.
The magic circle firm's management will meet to discuss the Tokyo arm in an attempt to establish a consensus on its future direction. Options that will be considered include closing the office or scaling it back.
Another possible scenario might be to invest heavily in the office by recruiting Bengoshi.
One senior A&O partner said: "Toyko is at a crossroads. There's a meeting scheduled to decide whether we should go for it or slash it."
Although the six-partner office, which was launched in 1988, makes a substantial operating profit, it is understood that once partner drawings are taken, the operation is loss-making.
Foreign law firms have generally had mixed fortunes in Japan. US firm Cleary Gottlieb Steen & Hamilton pulled shutters on its five-fee-earner Tokyo arm after deciding to focus on its China practice at the end of April this year. Meanwhile, Lovells' Japan practice, which was the subject of a year-long review was finally saved from the axe thanks to a boost in revenues after it picked up a string of high- profile instructions.
In contrast, Linklaters has invested heavily in Japan and launched Japan's first fully integrated law firm in April 2005.