There's no doubt business development in the law is about relationships, but when it comes to the time and marketing money used to build out referral networks, law firms want to know whether that meeting over cocktails will turn into meaningful work or just a hangover.

Whether it's creating a database that reviews their experiences with other firms' lawyers or more closely tracking which referrals lead to which type of work, law firms are investing in the infrastructure needed to vet and monitor incoming and outgoing referrals. And what they are finding is causing a shift in the relationships they prioritize.

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Cyril Shroff of Cyril Amarchand Mangaldas

Cyril Shroff, managing partner of one of India's largest law firms, Cyril Amarchand Mangaldas, spends 20 days each month traveling around the world, from New York to London and Singapore to Hong Kong. Much of his time outside of his home base of Mumbai is spent meeting with law firms that may seek his firm's guidance when representing clients in the closed market of India.

Shroff formed an international business development team with the sole purpose of tracking law firm relationships, measuring referrals and making sure, as he puts it, "the connections are kept warm."

Law firms invest a lot of money in meeting with other firms, so tracking the fruits of that labor makes sense, Shroff and others say. The main drivers for tracking the work are to better institutionalize referral relationships and to ensure, on a firm-by-firm basis, that there are roughly as many referrals coming in as there are going out.

What Shroff's team found when it finally looked at the data was revealing. The firms Cyril Amarchand spent the most time networking with didn't always match up to its referrals.

"Now we know who to spend time with," Shroff says. "It's all about relationships. In many cases, we referred much more than we received in referrals. And this becomes a good basis for a conversation. The Indian market is one of the biggest opportunities in the world, and everyone wants a piece of it."

For Shroff, who leads an independent firm with offices only in India, referrals are a key part of his business model.

Whether they track referrals as closely or not, other independent firms agree. Charles Martin, senior partner at U.K.-based Macfarlanes, says the independent firm market is dependent on relationships and "a high level of trust" between individuals and firms.

"This is not a quirky little backwater of the industry," he says.

But Martin's firm doesn't spend too much time tracking the relationships.

Charles Martin of Macfarlanes

"We keep a modest track of how things are going, but it's certainly not a tit-for-tat arrangement," Martin says. "We will send work where we think it is right to send it and won't necessarily be in a position to reciprocate when firms send us work."

Shroff has seen global firms place a bigger emphasis on tracking referrals as well. Staff are assigned countries in which to manage relationships, lawyers say, keeping tabs on how much of what type of work is sent where.

Herbert Smith Freehills is one such institution. Nearly two years ago, it reviewed the way its referrals work around the world and started to closely monitor work coming in and going out. Ian Cox, the firm's executive partner for the U.K., Europe, the Middle East and Africa, says the firm has grown more sophisticated in how it tracks referral information. "There is far more qualitative assessment of the firms we work with now," he says, including categorizing regions by their importance, having partners responsible for each referral relationship and keeping them constantly under review.

Cox says the monitoring isn't meant to be a "zero-sum game financially," and the firm wouldn't change a referral firm depending on work coming back, even if that's the hope. "The reason we refer work is for the benefit of our clients, not our benefit," Cox says. The changes firms are making, Cox says, are driven by the need to demonstrate that they can handle work in any jurisdiction. Herbert Smith Freehills says it has offices in 23 countries but referral relationships spanning an additional 150.

"If you want to claim you are a global law firm, then there are different models to do that," Cox says. "Firms like ours are all chasing big global clients, so we are required to provide that service."

Allen & Overy seems to have adopted a similar approach. The Magic Circle giant may already have more than 2,000 lawyers across 31 countries, but it says it has also developed a referral network that involves 450 law firms spanning an additional 153 countries. There are only 11 countries the network doesn't cover, all with little demand for legal advice, such as Tonga and North Korea. The firm says it refers 140 transactions each month, on average, amounting to more than 1,600 outbound referrals last year.

Cathy Bell-Walker of Allen & Overy

"What you don't want is a disorganized bunch of people flying off to somewhere like India and not coordinating efforts," says Cathy Bell-Walker, a finance partner at Allen & Overy, who oversees the firm's referral network. "In the past, general counsel have wanted to hold relationships themselves, but now they are seeing huge efficiency gains in getting a service as a package."

Global firms Baker McKenzie and Dentons have similarly looked to put structure around their referral processes. Last year, Baker McKenzie set out new terms and conditions to the firms it sometimes refers, all in an effort to achieve "consistency of policy around working with other firms," a spokesperson says.

In October 2016, Dentons launched NextLaw Referral Network, which vets law firm entrants from around the world. With more than 500 members, the network provides a framework for referrals among firms, whether Dentons is one of them or not.

'A Precious Moment'

For some firms, referrals are lifeblood. No firm better exemplifies that than Kobre & Kim, whose conflict-free policy means it takes no repeat clients.

Gary Singer, chief strategy officer at the New York disputes boutique, says that prior to joining Kobre & Kim his experience of referrals was based on one-to-one relationships.

"At Kobre & Kim, we institutionalize that," he says. "Every request for a referral is logged into a system and is processed centrally. I have a full-time staff of people who do nothing but manage our referral process."