During my interviews with firm partners, sometimes the topic of recruiting would come up and they would mention how competitive the market was for top associate talent. The solution, it would seem, would be to act like the business world and offer signing bonuses.
But in the legal profession, NALP (the National Association for Law Placement, and membership is required if firms want access to on campus interviews) has several guidelines that they make all firms adhere to. The guidelines
were created to "promote fairness and informed decision-making during the recruitment process." Among the prohibitions for employers are no signing bonuses, no exploding offers, and the need to keep offers open until 12/1.
I understand the part about exploding offers and the 12/1 deadline, since they're meant to prevent employers from pressuring students.
But what I don't understand is the part about no signing bonuses. Generally speaking, I think that the free market could play an important role in terms of recruiting. Indeed, there are L.A. firms that pay NY market and those that pay below NY market. In terms of attracting associate talent, having firms pay extra for the students they really want is not that strange an idea. After all, law schools pay " signing bonuses" in the form of scholarships to get the students they really want.
Even though I've already decided, for many classmates, the current decision process basically entails choosing the firm where "they really liked the people and the culture." But if something like signing bonuses were on the table, it could definitely be a great tool to distinguish firms from each other. Furthermore, firms pay clerkship bonuses as a clerk recruiting tool and I don't see why the same philosophy can't extend to signing bonuses.
A possible critique of signing bonuses is that they're also meant to pressure students, and that's a bad idea. Well, not really. Sure, they're meant to present a meaningful financial incentive to students who might not really care about where they go--lawyers of fortune. But for those students who really care about "people and culture," signing bonuses should not factor into their decision. Thus, signing bonuses would be quite market efficient, as they would affect/pressure only the people who care about money over culture.
The real reason I think that bonuses are outlawed is that NALP doesn't want the stratification of law firms. If (profitable) firm A is willing to pay a $10,000 signing bonus while firm B is only willing to pay $5,000, NALP fears that stratification would occur--that people would view firm A as better as firm B, and thus potentially jeopardize the cohesiveness of legal employers. But such an argument likewise is faulty, since firms are already stratified (every law student looks at Vault and AmLaw anyway). In short, NALP prohibits signing bonuses for self-interested reasons: to prevent the firms who can't afford to pay signing bonuses from jumping ship and depriving NALP of membership revenue.