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Thursday, December 11, 2008

A (Perhaps Ignorant) Question About Cold Offers and Fraud

I had fun the last few days kicking around my old stomping ground at the University of Miami, and catching up with some former colleagues.  Somehow, one of them and I ended up on the topic of "cold offers" (something he hadn't heard about), and the notion that firms may sometimes tell their summer associates that, even though there won't really be a permanent job for them at the firm, the summer associate may tell other employers that s/he does have an offer, and may even so note on their resume.

Assuming that this is an accurate understanding of how cold offers work (and, given how little I know about firms, I concede that it might not be), why isn't it fraud for the summer associate to so describe such an offer? At least at common law [with some variance among jurisdictions], fraud requires (1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury.

So, if a summer associate relies upon a cold offer to get hired by a different firm, and if the new firm can show injury (perhaps by showing that they would not have hired that individual if he did not represent that he had a permanent offer), doesn't that make out a case for common-law fraud?

Believe me -- I am incredibly sensitive to the pressures of the current job market, and to the significance of individuals being able to avoid the appearance that the reason they did not receive a permanent offer was performance-based. But at some point, isn't some of this very very shady?

Posted by Steve Vladeck on December 11, 2008 at 04:04 PM in Current Affairs, Steve Vladeck | Permalink

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Comments

My understanding of cold offers is the same as above and the practice was fairly well known back in my days as an associate (figure 1-2 cold offers per class of 60-70 associates). Remember that the large firms hate to admit that they didn't make an offer to summer associates because they fear it makes them look "bad" to the 2Ls they are trying to recruit (mind you, all this took place in a very different economy,when smart 2Ls with good grades from big-name law schools actually seemed "scarce" to firms hosting summer classes of 70 and 80). So the firm that makes a "cold offer" to a summer associate is helping itself, along with the associate. And, in exchange for portraying itself as the type of place where everyone gets an offer, the firm takes on a little risk -- that the summer associate might actually come to work there if she is unable to find another position. Since the practice was fairly well-known, you would expect all firms to take with a grain of salt the 3Ls claim that she got an offer from her 2L summer law firm. Now, with the economy changing, the cold offer practice might well change.

Posted by: miriam baer | Dec 12, 2008 8:37:55 AM

My understanding of cold offers is the same as Anonymous's. I also have heard of one or two instances where cold offers were actually accepted, and led to employment for about a year or so.

Posted by: Bruce Boyden | Dec 11, 2008 11:41:59 PM

I think your fraud claim would fail. The lie might not be material if the reason the student was not hired was not because of performance. Often it is just the firm's inability to absorb another lawyer. But it is more likely that it would not be reasonable to rely on "the offer" as opposed to relying on your own analysis of the student's writing sample, interview, and grades.

I think a better question to ask might be about the writing samples that students submit. Employers do rely on those, and I bet some of them are edited more than the students admit.

Posted by: also did some hiring | Dec 11, 2008 10:17:37 PM

I was asked by students to do it and didn't consider it for a minute, even though I had sympathy for their situation. They wanted to re-enter the on-campus interviewing as 3Ls being able to say that they got an offer but were looking for a better fit. Having to say that you didn't get an offer can kill your chances at getting 3L offers from other firms.

Posted by: did some hiring | Dec 11, 2008 8:05:07 PM

I think you've misconstrued the nature of a cold offer. Cold offers usually take the form of "we're giving you an offer, but we strongly encourage you to look elsewhere." That is, the students really do have offers. They just have offers at firms that have made it clear that they would rather the student not accept. I'm not aware of any case in which a student with a cold offer tried to return and was told "no." I am aware of a couple in which a student was given a cold offer and returned anyway. In those cases, the firm just sucked it up. The student, after all, did receive an offer...

Posted by: Anonymous | Dec 11, 2008 7:47:21 PM

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