Further unraveling of law firm offers to (first year) law students, and offers to new (first week) bankers from private equity

Eric Budish writes with a pointer to a Business Insider story on the current unraveling of the market for new lawyers and big law firms.

Inside the 'Wild West' of law-school recruiting that has Big Law reeling in talent earlier and more aggressively than ever

"this year, some legal-industry professionals say the competition has gotten out of control.

"Latham & Watkins, which hires about 300 students a year for its 10-week summer program, has told law schools that it has made 2023 summer-job offers to so many students ahead of the traditional period for on-campus interviews, or OCI, that it expects to conduct fewer OCI interviews this year, three people familiar with the firm's strategy said.

"Other elite firms — including Weil, Skadden, and Davis Polk — have also been making large numbers of early offers. At Simpson Thacher, a partner said, "We probably did half our interviewing before the formal OCI process."

"Working at a law firm after a student's second year, or 2L, has long been a rite of passage for students bound for Big Law. "Summer associates" are paid about $4,000 a week at top firms and get the chance to do legal research, eat nice meals on the company's dime, and meet the people they'll likely be working with after graduation — because upwards of 90% of them get an offer to return full time.

...

"Some law students are now entering recruiting talks in the spring of their 1L year. School administrators say it's often the students who get the ball rolling by submitting résumés via a firm's website after meeting a partner at a school meet and greet.

...

"Stanford and the University of Pennsylvania still ban pre-OCI recruiting, their websites said. Other schools require pre-OCI offers to stay open until OCI, so a student can compare firms. But not all firms respect the rules, and students sometimes are afraid to invoke them, said David Diamond, an assistant dean at Northwestern University's Pritzker School of Law.

"We've seen situations where a student receives an offer, and the offer deadline follows our policy, but the offer is accompanied by a diversity scholarship, and the diversity scholarship expires before or during" OCI, Diamond said.

...

"Some people trace the boom in early recruiting to a 2019 decision by the NALP to scrap rules that limited firms from courting first-semester law students. The rules were replaced by nonbinding guidelines."

**********

And even more frenzied are the job offers that new bankers (in their first week(s) on the job) are getting from private equity firms:

Wall Street just kicked off an annual Hunger Games-style recruiting ritual for junior talent that has young bankers interviewing till 2 a.m. for jobs that don’t start until 2024. https://advance.lexis.com/api/document?collection=news&id=urn:contentItem:668V-4FD1-DXY7-W4MT-00000-00&context=1516831 

"As Insider reported on Tuesday, the frenzied process appears to have kicked off on Monday evening when recruiters for a handful of firms sent out blast emails to select junior bankers suggesting meetings ASAP — before the window of opportunity closes.

"The emails forced these young bankers — many of whom have just started their first Wall Street jobs at places like Goldman Sachs and Citi — to figure out ways to quietly leave their desks to interview for jobs that won't start until the fall of 2024. 

...

"In recent years, the PE recruiting process has moved earlier and earlier, from October to September, but never to late August, as it has done now. It's forcing firms to figure out how to interview candidates with no real job experience. "

Unraveling of Forensic Psychiatry fellowships makes participants paranoid on both sides of the market

 Where lawyers speak naturally about rules, psychiatrists don't shy away from talking about feelings, and the current disorder in the market for forensic psychiatry fellowships is making many participants miserable.

The Fellowship Application Process Must Be Reformed  by Octavio Choi, Journal of the American Academy of Psychiatry and the Law Online September 2021, 49 (3) 300-310; DOI: https://doi.org/10.29158/JAAPL.210088-21

"These are unhappy days in the world of forensic psychiatry fellowship programs. Here is the crux of the problem: too much product, not enough customers. Agapoff and colleagues report that for the 2016–2017 academic year, forensic psychiatry fellowships achieved a 56 percent fill rate, with 65 residents spread over 44 programs offering a total of 116 positions.1 Since then, the number of forensic programs has continued to grow, up to 48 ACGME-accredited programs offering 127 positions in 2018–2019. Seventy-three of those positions were filled, equating to a 57.5 percent fill rate.2 Things were better in the older days. According to ACGME records, in 2012–2013 there were about the same number of active residents (70) in just 36 programs.3

"The implications are clear: forensic fellowship programs are increasingly desperate to recruit a small number of applicants. From the perspective of program directors such as me, the rational strategy to pursue in this situation is to identify promising applicants early and try to sign them up before anyone else can get to them. Indeed, in recent years, fierce competition has led programs to make earlier and earlier offers that are time-limited (also known as the “exploding offer”). Paranoia is high. Given the nontransparent nature of most transactions in the applications process (no one really knows what anyone else is up to), and lack of objective referees, it only takes the slightest hint of malfeasance for outrage and fear of missing out to amplify.

"The overriding fear of many program directors is that they will not fill their available positions. In addition to bruised egos, being left with open positions means contracts will be left unfilled, possibly leading to cancellation and, ultimately, reduction or elimination of programs. Literally, to not fill risks death (of the program). The imperative, then, is to avoid not filling at all costs.

"On the other side is a paradox. For applicants, low fill rates should translate into a buyer's market, yet because the market is unregulated, the current system inflicts much suffering on them. As one recent applicant succinctly described the process: “it's a hot mess.” Competition by programs for the limited number of applicants has led to earlier and earlier offers being made with shorter and shorter times to decide; too short to adequately assess and receive offers from other programs. Indeed, the whole point of an exploding offer, from the program's point of view, is to curtail assessment of other programs by forcing applicants to make decisions before they might otherwise be ready. In marketing parlance, the idea is to pick up a bargain by taking a good off the market before it can be fairly priced.

...

"The failure of the current system is not about program directors being bad people. It is about the fragile nature of voluntary agreements during difficult times. The math is simple. If each program director has a 95 percent chance of behaving ethically over the course of the applications cycle, and there are 48 programs, there is only a .95 to the forty-eighth power probability (=8.5% chance) that all 48 directors will behave ethically in any given year. A single program director acting less-than-fully ethically is enough to kickstart a paranoid feedback loop that devolves into chaos: “If program X isn't playing by the rules, I don't see why I need to keep playing by the rules, especially if it's going to hurt me.”

"But note that system failure does not even require any actual unethical behavior; all that is required is the perception that others are behaving unethically, a perception that is encouraged to flourish in the context of desperation and lack of transparency"

Marketplaces, Markets, and Market Design (my Presidential address in the July AER)

Here is the paper that grew out of my Presidential address as I stepped down from the AEA presidency in January. It attempts to summarize my current views on market design.

Marketplaces, Markets, and Market Design

• Alvin E. Roth



AMERICAN ECONOMIC REVIEW
VOL. 108, NO. 7, JULY 2018
• (pp. 1609-58)

Download Full Text PDF 
(Complimentary)

• Article Information

Abstract

Marketplaces are often small parts of large markets, and both markets and marketplaces come in many varieties. Market design seeks to understand what marketplaces must accomplish to enable different kinds of markets. Marketplaces can have varying degrees of success, and there can be marketplace failures. I'll discuss labor markets like the market for new economists, and also markets for new lawyers and doctors that have suffered from the unraveling of appointment dates to well before employment begins. Markets work best if they enjoy social support, but some markets are repugnant in the sense that some people think they should be banned, even though others want to participate in them. Laws banning such markets often contribute to the design of illegal black markets, and this raises new issues for market designers. I'll briefly discuss markets and black markets for narcotics, marijuana, sex, and surrogacy, and the design of markets for kidney transplants, in the face of widespread laws against (and broader repugnance for) compensating organ donors. I conclude with open questions and engineering challenges.

Citation

Roth, Alvin E. 2018. "Marketplaces, Markets, and Market Design." American Economic Review, 108 (7): 1609-58.DOI: 10.1257/aer.108.7.1609

****************
Here's the video of my delivery of a preliminary version of this longish paper as a (relatively) short (1 hour*) talk at the AEA meetings in January, 2018:
AEA Presidential Address - Marketplaces, Markets and Market Design
Alvin E. Roth, introduced by Olivier Blanchard
View Webcast
***************

*the video has adjustable speed. If you listen to it at 1x, you hear it as I presented it.  If you listen to it at .5x, you hear me as my students probably do, droning slowly on. If you listen to it at 1.6 or 2x, you might not be able to hear individual words, but you can enjoy the body language...

Unraveling of the second year summer associate market: derailed on the fast track

The meltdown of the law firm Dewey & LeBoeuf has consequences for the lawyers they hired years in advance. Here's a story about the students who accepted summer internships a year ago...

For Law Students, Dewey & LeBoeuf Internships Evaporate

"[last week]...about 30 students learned that their plum summer jobs at Dewey & LeBoeuf had vanished. 

[These students] "had expected to walk out of their final exams this week and into a summer position promised back in the fall. Like summer associate jobs at most white-shoe law firms, they would have earned around $3,000 a week, plus free meals, field trips and other goodies. It would be a cushy, two-month courtship that virtually guaranteed equally lucrative employment with Dewey after graduation.

"But now those jobs are gone, and just about every comparable opportunity was booked nearly a year ago.

"The legal industry has an unusually synchronized and suffocatingly compressed hiring schedule. Most big law firms do not have rolling applications for their summer slots. Instead, they interview students during the same two-week period right as their second year of law school begins. At that point students have received only two semesters of grades, but those grades will determine where they work the next summer — and often, for the rest of their lives. That is because firms offer permanent, postgraduation jobs to just about every summer associate, for fear of looking like their business has suddenly dropped off if they do not.

"With Dewey’s announcement, these students’ careful, fastidiously risk-averse career planning collapsed under them, and they fell off the job track not just for Dewey but for its peer firms. Of the dozens of major firms contacted for this article, only one had picked up one of these stranded summer associates, and that was because one of its partners had a personal connection to the student.

Unraveling: a brief review (and reply)

The peer review process, for all its flaws, normally eliminates the need to write the kind of wide-ranging reply that I have forthcoming in the Journal of Labor Economics.  Here's the abstract and introduction: the link to the full paper is below.

Abstract: In this reply I describe the unraveling of transaction dates in several markets, including the labor market for new lawyers hired by large law firms. This and other markets illustrate that unraveling can occur in markets with competitive prices, that it can result in substantial inefficiencies, and that marketplace institutions play a role in restoring efficiency. All of these contradict the conclusions of Priest (2010).

And here are the opening paragraphs of the paper:

"Priest’s (2010) paper, “Timing ‘Disturbances’ in Labor Market Contracting: Roth’s Findings and the Effects of Labor Market Monopsony” seeks to rebut what he describes as “The work of Alvin E. Roth and colleagues writing in what might be described as the Roth tradition” about “a curious set of phenomena in some labor and product markets.”

"Briefly, the “tradition” Priest addresses has studied the timing of transactions, and observed that some markets go through episodes in which they unravel in time, with transactions becoming earlier and more diffuse in time from year to year, and with offers often coming to have very short durations (“exploding” offers). This has often led to changes in marketplace institutions, including rules and regulations to introduce a uniform time for market transactions, and restore thickness. Frequently this involves facilitating a marketplace at a later as well as a more uniform time. (For overviews, see Roth and Xing 1994, and Niederle and Roth 2009.)"


Roth, Alvin E, "Marketplace institutions related to the timing of transactions, and reply to Priest (2010)" Journal of Labor Economics, forthcoming (maybe April 2012).

Unraveling of law firm recruiting

The WSJ reports on the continuing unraveling of recruiting by large law firms, which reports how much of the critical hiring for positions beginning in September, 2013 is going on right now: Law Schools Push Recruiters

"Thousands of interviews for jobs at law firms are taking place now as top law schools, under mounting pressure to help indebted students snag jobs, increasingly push major law firms to recruit in August, months earlier than in previous years.

... 

"Law firms follow an unusual tradition of recruiting the lawyers they eventually plan to hire two years in advance. For example, they are interviewing second-year law students now for summer associate positions that start in May or June 2012. At the end of the 2012 summer, the firms expect, they will then invite almost all the summer hires to work full-time as junior lawyers, likely starting in September 2013.

...

"By forcing the big firms to recruit in August, rather than as late as the end of October, as in previous years, law schools are hoping to give their students an edge in the competition. "There was a race to the front of the line by law schools," said Keith Wetmore, whose title is chair of Morrison & Foerster LLP, which is sending partners to 28 campuses this month to recruit students for its 2012 summer associate class.

"In 2000, for instance, seven law schools held their interviewing weeks in August. By 2009, the number had increased to more than 70, and this year, the figure will top 100, according to Mark Weber, assistant dean for career services at Harvard Law School.

"During the market crash of 2008, both Harvard and Yale law schools "went essentially last" in the recruiting season, with their interview weeks in September and October. "Their students did get hurt, and got fewer offers," said James G. Leipold, executive director of NALP. "Our students still had great jobs, but you do even better when you're at the beginning of the [recruiting] process than the end," Harvard's Mr. Weber said. A spokeswoman for Yale Law School said she couldn't comment.

A match for the law firm market?

Paul Kominers points me to this item: New ‘JD Match’ to Help Law Firms Find Law Students to Interview; K&L Gates Giving Service a Tryout

"Tired of the traditional on-campus law school interviewing process? A consultant may have the answer for some who would like to deal more directly with law firms and other legal employers seeking law students who want to apply for work.

 And here's a longer article from the Am Law Daily, which suggests that unraveling is the motivator, and a deferred acceptance algorithm is part of the proposed solution: JD Match Aims to Fix the Law Firm Recruiting Process

"On Monday, Ashby Jones at The Wall Street Journal's Law Blog lifted the curtain on JD Match, a new product that will try to connect job-seeking law students with firms. For a $99 fee, students upload their resume and basic information to JD Match, then rank the law firms where they’d like to work. The law firms, in turn, rank students. An algorithm matches firms and students based on their rankings.


"It seems like such a nifty, logical concept that we at The Am Law Daily are kicking ourselves for not thinking of it first. We reached out to the driver behind JD Match, law firm consultant and Adam Smith, Esq. blogger Bruce MacEwen, to find out more. Following is an edited transcript of our phone conversation on Tuesday.

What was the genesis of JD Match?

"People have been kicking around the idea about doing something about the dysfunctional law firm recruiting model for a long time. [Harvard Law School professor] Ashish Nanda wrote a piece in The American Lawyer last January addressing this very thing.... And from my perspective, the great train wreck of the 2008/2009 recession really revealed the flaws in the system.

There's this arms race to interview earlier and earlier. It's not a smoothly functioning market at all. The economist in me just found that infuriating. So my partner Janet Stanton and I started talking about doing something like this, probably shortly after Ashish's article came out.

We did an extensive amount of research with managing partners at firms, hiring partners, career services people at law schools, and even students and junior associates, and quickly realized that the medical matching model which Ashish had written about was not going to work in our world. To begin with you can't make anything mandatory with law firms. Nevertheless, we were inspired by the idea of having an algorithm at the heart of the process.


How will the algorithm work?

"The algorithm will run three times in the OCI recruiting season: August, September, and October. What it does is assume the Econ 101 truth that each firm and each student is in the best position to determine what's in their self-interest. So the only input to the algorithm is preferences for firms for students and preferences for students for firms. That's it. No qualitative or quantitative information whatsoever.

"The assumption is that the preferences represent all the distilled information--research, anecdotes, gossip, whatever--that firms have about students and students have about firms. When the algorithm runs, a couple of things happen. First, no student and firm wlll ever be paired unless it's mutual. So if I didn't put Skadden on my list, it doesn't matter if Skadden loves me. I'm not going to be matched with Skadden.


So give me a hypothetical scenario of how this would work.

"Let's pretend I did put Skadden as my first choice and they did have 25 spots. I will tentatively, as the algorithm is running, be matched with Skadden unless and until I get bumped because Skadden gets matched with 25 students it likes more than it likes me. And then I go to my next available firm that has a seat for me. And then it goes on like that.

"Students get [matched with] one and only one firm on the theory that they can only take one job. Firms will get as many students as they said they have slots or maybe fewer if not that many students like them. But they won't get more. So this helps firms manage yield. And two professors of law [Kevin Quinn at the University of California at Berkeley and Andrew Martin at Washington University in St. Louis] are writing the algorithm for us.

Why will you run the algorithm three times?

"Let's pretend that I'm a law student back at Stanford but I have delusions about what a hot commodity I am. Let's say the first 15 firms I rank are highly aspirational: Skadden, Davis Polk, Cleary. You know. The usual suspects. So the August match runs, and I find out that I was matched with firm number 17. Well, this is a reality check for me. It's unfiltered, real-time market information and that should tell me for the September match and OCI, I need to be a little more realistic.

Is there a baseline number of students and firms that JD Match will need to sign up in order for the process to work efficiently?

"Yes. We have four Am Law 30 firms signed up including K&L Gates. We can't name the other three yet, but they will come out shortly. We've been previewing JD Match primarily to the law firms, but we've also reached out to the law schools. The schools are intrigued. They're a little nervous about upsetting the OCI process that they drive, but they do understand JD Match provides an overlay to the process as it currently works. We don't change anything about OCI.

What else do you have in the works?

"We are creating something called the JD Match Institute which we will fund out of our revenues. And its designed to begin to look at the data we will be gathering and suss out what actually makes for successful lawyers.

"Our strong suspicion--confirmed by [University of Indiana professor] Bill Henderson--is it ain't GPA. In version 2.0 of JD Match we will introduce some psychographic and behavioral testing for students. Voluntary, obviously, but there are very few law firms that are doing this. McKenna Long is doing it. Some firms like K&L are doing it in the U.K....

"What we think we can develop in fairly short order is empirical evidence of what makes for a successful lawyer and that would be tremendously exciting for us because law firms could begin to hire a little more rationally. Frankly I think it could only be good for the students. There are 40,000 law students in the U.S. and how many of them are on the Harvard Law Review? But a lot of them could be great with clients, could be responsive, could be team players, could be emotionally intelligent....It could only open up more doors."

Further consequences of the unraveling of the market for law grads

The NY Times reports that some of the young lawyers who were made permanent offers after their second year summer associateships in August 2008 (for permanent jobs in 2009), only to have them rescinded or deferred, are finding satisfaction in public interest law.

Young Lawyers Turn to Public Service

"With offers of employment made in August 2008 and the full force of the recession hitting in October, many big law firms — like Latham & Watkins, where Mr. Richardson was a summer associate — had to re-evaluate the job offers made to members of the class of 2009. As a way to keep their costs down while holding on to promising associates, many offered the graduates the chance to take up to a year off before starting as associates, complete with a stipend of $60,000 to $75,000. They could travel, do research, or choose — as many did — to work in the public sector.

"With the deferral year ending, some of these newly minted lawyers are surprised to find themselves reconsidering their career goals and thinking about staying with public interest law. When Latham & Watkins asked Mr. Richardson to defer his start date until at least October 2010, he took his interest in environmental issues to Resources for the Future, a nonprofit policy group based in Washington, where he did legal research on the Deepwater Horizon oil spill and climate change.

"Now, despite heavy student-loan debt and a family to support, he has decided to say no to Latham and stay with public interest law, even though it pays far less.

“This is an amazing work environment,” said Mr. Richardson, who graduated from the University of Chicago Law School. “I’m working with a lot of really smart people and getting published. I’m not sure if there’s anywhere else I could do this, at least at this point in my career.”

"Mr. Richardson claims that everyone he knows has at least considered staying in public interest — and law school faculty members confirm that they are seeing a growing interest in that field."
...
"David Stern, executive director of Equal Justice Works, an organization devoted to getting new legal talent in the nonprofit and public sectors, notes that the pay gap between public interest and private firm work is steep. “The gap is multiples of the public interest salary, with a public interest attorney starting at, on average, $35,000 to $39,000 a year,” he said. “In a big law firm, these attorneys are starting at $140,000 to $150,000.”

"Someone who took a stipend from a law firm and then opted for public service law could also find themselves negotiating a payback plan for the stipend; policies differ from firm to firm on whether or how much of a stipend must be repaid."

Update: Steve Leider points me to this Atlantic column, pointing out that lawyers deferred from BigLaw jobs and being paid to do pro bono work are now volunteering at public interest organisations and displacing other lawyers who would have worked there...Money for Nothing

Here are some earlier posts about unraveling of the market for lawyers.

Unraveling of law firm interviews of 2nd year students

Catherine Rampell has an informative article about The Other Law School Arms Race.  The date at which large law firms interview 2nd year law students (for summer associate positions that are the entry path to permanent positions after graduation) has moved earlier, to the summer before the second year begins.

"Speaking of the career paths for new lawyers, we’ve noted before that the sour legal job market has encouraged law schools to find creative ways to make their students look more attractive to employers, at least when compared with students from other schools. Intentional grade inflation is one particularly controversial tool schools have been using.


"But the arms race has found another battlefield as well: on-campus interview week.At most top schools, early in the second year of law school, dozens of law firms visit campus to conduct a round-robin of job interviews with students. These interviews are the first step to a summer associate job after the second year, and oftentimes a permanent job offer after graduation following the third year of school.

"The exact timing of this “on-campus interview week” has traditionally varied by school, and from firm to firm, thereby allowing different firms to send recruiters to Harvard one week, Columbia the next, Chicago the following week, and so on.

"But with the job market so tight, last year schools began worrying that if law firms visited them later in the fall, the few job offers available would already be gone. So many top schools bumped up their on-campus interview weeks from October to September to finally August, before the school year even starts, because they wanted their students to have a chance to claim a job slot before their counterparts at other schools did."
...
"In February the organization that creates guidelines for legal recruiting process, NALP, released new rules about how long job offers could stay open, a measure intended to curb this interviewing arms race. But the new guidelines have not so far inspired any coordinated new schedule for interviewing process. "
...
The article closes with a news release from Northwestern: Northwestern Law, Jones Day Agree to On-Campus Interviewing in September

"CHICAGO --- Northwestern University School of Law and the global law firm Jones Day announced today July 26 that the firm will conduct its on-campus interviews for 2011 summer associates in September instead of during the law school's official on-campus interviewing (OCI) program, which begins Aug. 11. In a move benefiting both students and law firms, Jones Day will conduct interviews on behalf of its 14 U.S. offices on Monday, Sept. 13.


"Jones Day joins Northwestern Law in the belief that the current recruitment system has created a competitive race among law schools and law firms to conduct on-campus interviews earlier. The result is an inefficient system that does not serve employers or student applicants well, according to the law school and law firm.

"The current system discourages the efforts of law firms to learn about all the competencies (over and above grades) of potential associates," according to David Van Zandt, dean, Northwestern Law. "It also requires firms to make employment decisions and predictions about their hiring needs too far in advance of permanent start dates.

"The compression of summer associate interviews in August is also problematic for students since it constrains their time to make sensible decisions about with whom to interview, to adjust interviewing techniques based on what they learn during the process, or to make sound decisions about offers of employment," said Van Zandt. "It contributes to a frequent lack of fit between graduates and the law firms, which inevitably leads to higher attrition levels for the firms."

"Taking this step with Northwestern will help show that a more balanced, less frenzied approach to on-campus recruiting is not only still possible, but indeed desirable for all concerned -- students, law schools and law firms," said Greg Shumaker, firmwide hiring partner at Jones Day.

HT: Eric Budish

Further consequences of unraveling of law firm hiring

The Crimson reports on the difficulties facing Harvard Law students graduating in this recession year: Tough Times For Harvard Lawyers

"The two-year lag between when firms extend job offers and when employees begin their first year forces firms to predict associate demand far in advance of the start date and leads to inaccurate predictions of hiring needs. According to Weber, the backlog of entry-level associates or “overhang” is negatively impacting firm demand for associates in this recruiting cycle. After the financial crisis pummelled investment banks and the fountain of transactional work dried up, law firms were forced to keep the commitments they made to new hires two years earlier. The result: a spate of deferred start dates that began with the class of 2009 and may continue with the class of 2010. "

Exploding offers

My favorite exploding offer story is probably this one:
"I received the offer via voicemail while I was in flight to my second interview. The judge actually left three messages. First, to make the offer. Second, to tell me that I should respond soon. Third, to rescind the offer.
It was a 35 minute flight." −2005 applicant for federal judicial clerkships (p448 of "The New Market for Federal Judicial Law Clerks" )

Exploding offers can have a malign effect on market performance. Here's a just-published experimental investigation that focuses on how exploding offers contribute to the unraveling of a market:

Niederle, Muriel, and Alvin E. Roth, “Market Culture: How Rules Governing Exploding Offers Affect Market Performance," American Economic Journal: Microeconomics, 1, 2, August 2009, 199-219.

(In case you were always wondering how lawyers and gastroenterologists are similar, and different, these two papers will give you some clues, at least for when they are looking for jobs...)

Here's the Abstract of the AEJ Micro paper: Many markets encounter difficulty maintaining a thick marketplace because they experience transactions made at dispersed times. To address such problems, many markets try to establish norms concerning when offers can be made, accepted and rejected. Examining such markets suggests it is difficult to establish a thick market at an efficient time if firms can make exploding offers, and workers cannot renege on early commitments. Laboratory experiments allow us to isolate the effects of exploding offers and binding acceptances. In a simple experiment, we find inefficient early contracting when firms can make exploding offers and applicants’ acceptances are binding.

Market for lawyers: second year summer associates

Big law firms do a lot of the hiring of new lawyers by first hiring them as second year summer associates, who will work for the firm the summer between their second and third (last) year of law school, and who will often be recruited back to full time associate positions following graduation. At various times in the past this recruiting process has unraveled, with first year summer associateships sometimes assuming a similarly important role in the recruiting and screening process. (In general, unraveling is the process by which a market starts to arrange transactions, in this case employment, earlier and earlier before they will actually begin, and it can make the matching process inefficient.)


The Harvard Crimson reports what might be the beginning of some unraveling, as the recruiting process by which second year summer associates are recruited at Harvard will become about a month earlier, and before second year classes begin: HLS To Move Up Summer Job Hunt.

"Harvard Law School will move up its recruiting process in order to bring recruiters to campus earlier in the year after firm cutbacks due to last fall’s economic turbulence left many students with far fewer summer offers than in years past. The Law School’s Office of Career Services announced that the school will invite firms to campus the last full week of August before classes begin, advancing the recruiting timeline by about a month. Traditionally, the Law School’s recruiting cycle began later than at comparable institutions, which hurt students last October when law firms reduced the number of spots reserved for Harvard recruits in light the impending recession. Fly-out week—the time when students visit firms who have expressed interest in them—is now scheduled for the week of September 14, two weeks after the first day of classes. During that period, the school puts classes on hold for a week-long fall break. "