Friday, October 24, 2008

The Rescinded Offer Situation, Or, Pondering Whether the NALP Rules Still Apply IN THIS ECONOMY

It's been the talk of the town lately (including four - FOUR - posts about it on Above the Law). For those of you who have been living under a rock, or who are too worried about even getting a single offer because no one told you that it was completely unnecessary to do the maximum number of OGI interviews to care about it being rescinded, we'll bring you up to speed. Apparently at least one - and possible more - law firms contacted students to whom it had given offers for 2L summer employment and said, in effect, that they had oversubscribed and the offer was no longer valid. It seems like the main culprits so far have been, according to ATL, Akin Gump and Proskauer Rose. [Ed. Apparently Proskauer told some people that they should consider other offers, but did not rescind - also reported that Bryan Cave has been actively encouraging people to turn down offers]. [Please make it public if you have contrary or additional information].

"Hello, Michael? It's Arthur Edens from Kenner, Bach and Leden - you remember how we gave you an offer to join our 2009 Summer Program? Well . . ."
NB: The look of concern on Michael Clayton's face. He played by the NALP Rules; his firm didn't.

We have also heard, anecdotaly, of a firm calling its offerees and saying, in effect, "Look, we want to give full-time offers to all of our Summer Associates, and now we're getting to a point where we have to many to do that - SO, you can still come work here if you want, but we can't guarantee you a job when you graduate so you may want to work elsewhere."

ATL is advising students to not "sit" on their offers and accept one as quickly as possible, even if they are waiting to hear back from other firms.

Students, Law Schools, and Legal Employers alike have agreed, in our understanding, to be bound by the National Association for Law Placement ("NALP") guidelines. For the Fall 2L recruitment context, this means that
Employers offering positions for the following summer to candidates not previously employed by them should leave those offers open for at least 45 days following the date of the offer letter or until December 30, whichever comes first . . .
May employers nonetheless make an "exploding offer"? No, they may not:
Q. May an employer make an offer under the condition that the offer remains open only until the target number of acceptances is reached, at which point the offer is withdrawn (explodes)?

A. No. NALP members are expected to adhere to the provisions of the NALP Principles & Standards specifying that offers shall remain open at least until the applicable response deadlines. NALP understands that employers affected by economic pressures or uncertainties cannot accommodate a higher than targeted number of acceptances. In the same spirit, it remains essential that students seeking employment have adequate opportunity to investigate their options and should not be pressured to make decisions in advance of the prescribed dates. Employers can manage the offer process to increase the predictability and flow of information consistent with the Principles & Standards . . .
What are we to make of this "NALP understands" language. Does that mean that a firm could rescind an offer or not hold it open after a certain date w/out notice? Here's what NALP had to say about rescinding the offer:
NALP's Principles and Standards do not condone rescinding offers. However, in recognition that rescission does occasionally occur, NALP presents this article with suggestions for ameliorating the situation.
NALP then provides some "guidelines" - like noting that "mutual understanding is key" and "there are alternatives"; but it seems like all of the "guidelines" apply to situations where the offer rescinded was "extended by a legal employer and accepted in good faith by a candidate"; where there is "a signed offer and acceptance letter." Clearly, not the case here - and that would bring us back to language above about not being allowed to have exploding offers. It would seem like rescinding offers at a specialized date

As for the Employers - So our initial take is this - any firm that has actually gone ahead and rescinded offers has broken the NALP rules. UVA Law Career Services should make a not of this, and provide this information to future students during the recruiting process next year, at a minimum. The fact is that if the firms that are doing this had planned ahead about how many students they could budget for this summer and doled out acceptances accordingly (putting some candidates on hold after their callbacks is perfectly permissible, the NALP guidelines say), then they wouldn't be in this permission. Mostly because of the bad economy, but partly because shortsighted planning.

On the other hand, it would seemed to us that a firm that simply warned students about not being able to offer anyone full-time jobs wasn't in violation of the rules, and was, in fact, trying to abide by the spirit of the rules by facilitating "mutual understanding" in a difficult situation. Still not ideal, but better than the alternative.

As for the students - this "no sitting on the offer" business that ATL keeps propagating ("It's Friday. If you're still sitting on multiple offers by Monday you are simply crazy."), is far more complex than it would seem. Basically, there seems to be two somewhat contradictory underpinnings of this advice. First, you should accept an offer ASAP because holding multiple offers opern for too long hurts your fellow students. Second, you should accept an offer ASAP because you are likely to lose it if you don't; therefore it's in your own best interest. These are two different concerns, and we'll try to disaggregate them.

Holding Offer(s) Open Hurts Your Fellow Students
This is completely true. Many firms place students on a "hold" list after their callbacks while they are trying to figure out how many students (see above), and by holding your offer open that you don't want, you're hurting those students, many of whom may not have a single offer yet, even though NALP permits you to do it. So there's a good reason not to do it - but to me this shouldn't stop you from holding ONE or TWO offer open if you're still waiting on another. Like say (arbitrarily from the top of the Vault rankings) that Wachtell is your first choice, and you are on "hold" with them - well it makes sense to hold open an offer with Cravath and S & C, in case that offer from Wachtell doesn't materialize (and you should be sure to continue to follow up with / express interest in Wachtell, of course). Why hold open with two firms? Because one of them might rescind, supra.

There's is no doubt that the above is both legit under the NALP. And keeping 1-2 offers open in this way hurts your fellow student a little, but it's not because you're being indecisive, it's because you're waiting for your own first choice to materialize. It helps a lot if you can try to get a timeline from Wachtell (in the example) and give a timeline to CSM and S & C; we have heard that firms at least attempt to be accomodating in this area - that goes a long way to mitigating the harm to students on the hold list for CSM / S & C. Obviously not ideal, but again, we think that you should put a lot of thought into your 2L summer job for obvious reasons, and that the NALP guidelines are designed to facilitate this, while at the same time being mindful of the concerns of your fellow students.

That's about all we have to say about that, and we think the above approach is acceptable, while any much more than that is not.

Holding an Offer Open Hurts You
First and foremost, the claim here is that you run the risk of getting it rescinded, supra. But in a way, that almost suggests paradoxically that you should keep as many offers open as possible (the max is five under the NALP rules, FYI, subject to some date limitations). Why? Well, how are the people who accepted with Akin Gump feeling right now? Probably a bit uneasy. Moreover, if a firm can rescind offer without notice prior to acceptance, whose to say they can't do it without notice after the acceptance. It's not like one option is more not-allowed under the NALP guidelines than the other, after all. Keeping multiple offers open as long as possible would seem to be a good way to keep your options open. Think of the calculus here: Accept an offer and you're locked in, you could have a firm rescind open offers or worse; keep them open within the NALP guidelines you're keeping your options diversified, so if one goes bad, you might have a chance to mitigate it. At the very least, ATL's suggestion that students ought to play into the hysteria and a few firm's violating the NALP guidelines by accepting an offer by Monday (when some people are still going on callbacks) is dubious.

The argument goes a bit further:

Next summer, when 20% of summer associates are whining about not getting an offer, we'll be forced to ask how that happened. And part of the answer will be that some people who got cut started off on the wrong foot and could never make it up. The people who have already accepted, are already part of the "team," they have a leg up on the 2009 summer competition. Those kids have already shown their firms that they are excited to be there. The people who are sitting on multiple offers right now are showing their firms that they are trying to better deal their future employer, or they are indecisive, or they are woefully unable to understand market forces. None of these impressions are the ones you want your employer to be thinking about over the summer.

Our response: there's something to be said for showing you want to be there. But, doesn't waiting for a firm that's put you on hold and accepts you at the last minute and then going there show that you "want to be there" too? It might be a valid point that ATL is making, but it doesn't follow that one should accept at a place that isn't a good fit. And, again, we think that at least some of the people "sitting" on their offers may understand those "market forces" all too well. And what a somber note. We like cooperation to get things done, not competition.

Finally, we realize that some might argue that there's an underlying attitude here that smacks of entitlement, not being cognizant of economic realities, etc. Well, we disgree - this really an issue as simple as employers, law schools, and students agreeing on some rules that were thought to be mutually beneficial to everyone. It seems like as a result of unforeseen economic circumstances and perhaps at least some short-sighted but well-meant planning, law firms have breached those rules. Should law students be forced to do the same?


Anonymous said...

A solid, albeit long post. I think you're right that there's something to the notion that people should make a decision as soon as possible (both for their own sake and for the sake of others), but that there are still compelling reasons for some to wait it out. I think the moral of the story is that people just have to be aware of the potential risks involved in holding on to an offer so that they can more accurately determine for themselves whether it is worth it to hold out for another firm.

Rule 12 (f) said...

TY broseph.

I think it would be difficult for a law student with internet access and half a brain not to be "aware" of the risk of firms breaching the NALP guidelines, but I also think that the right call could involve waiting, depending on the circumstances. You don't want to summer at a place you don't want to be, because, especially in this economy, 3L interviewing will be tough.

Anonymous said...

my friend who has an offer at proskauer said her offer was not rescinded - she was told that she should consider her other offers.

Rule 12 (f) said...

ty for info

Anonymous said...

I wonder if firms are doing things consistently among law schools. I.e., if a school decides to rescind offers, does it rescind all of them or does it rescind some and give the "cold offer" phone call for others?

Anonymous said...

I would imagine that the firms are doing this to candidates who are on the margin or at least at risk of being no-offered at the end of the summer. The outstanding candidates
(in the eyes of the firm) probably are not receiving these phone calls.

Anonymous said...

Totally agree; and props for the ATL shoutout.