Generally speaking, you should decline an offer of employment as soon as you decide that the position is not right for you.
Holding an employment offer when you have no intention of accepting it is inappropriate–it does a disservice to both your classmates, who might be extended an offer if you were to decline, and to employers who are working hard to organize successful and well-attended summer programs. NALP standards NALP has standards that provide more specific parameters for upper-class students. According to NALP, after October 15, a student should not hold open more than four offers of employment simultaneously, and after November 1, a student should not hold open more than three offers simultaneously.
For each offer received that places a student over the offer limit, the student should, within one week of receipt of the excess offer, release an offer (Provision V.A.4). In addition, students should be aware employers have the right to retract any offer that is not reaffirmed by a student within 30 days of the date of the offer letter (Provision V.A.2). Phone call versus letter versus email It is common to respond to an offer in the same manner that it was conveyed (i.e., respond to a telephone call with a telephone call), but it is not necessary.
If you are nervous about calling with your news, keep in mind that you should not anticipate that the phone call will be long, intense, or even awkward. Law firms get turned down regularly, and though they may not like it, they are typically quite gracious about it. It is acceptable to leave a voice mail message declining a job offer, but don’t try to avoid talking to a live person by calling at 11:00 p.m. Voice mail records the time of the call, and your attempt to avoid the conversation will be obvious. If the thought of a phone conversation makes you very uncomfortable, just send a short, courteous letter. Only respond by email if that is the manner in which you received your offer.
Appropriate addressee
The best addressee is the person who made you the offer; another choice is the person you met on campus or was in charge of your callback visit. A recruiting director is also an option since she is the person who keeps the files. If you decline by phone, you can send your follow-up letter directly to the recruiting coordinator (explain you are confirming your phone conversation with X), or write to the person with whom you spoke and cc the recruiting director. What to say You need not volunteer a lot of information; just be direct and scrupulously polite.
Think of the sorts of things the law firm would say in turning you down, and adapt them–you're grateful for the offer, you very much appreciate their time and effort, it's a difficult decision when faced with a number of interesting choices, but you have a limited amount of time and you couldn't do everything, and you think another option is best for you for this summer (or words to that effect).
You can certainly volunteer the name of the firm where you'll be working, but you don't have to. In a telephone conversation, you may be asked where you're going, so just be prepared for the question. Generally, they're curious, not upset, and will simply say something nice like “Oh, XYZ is a good firm.” If you want to keep a line of communication open with one or more specific lawyers at the firm with whom you had particularly good conversations, you can certainly write them separate notes (but you don't have to).
Follow up If you decline an offer over the phone, it is a good idea to follow up with a letter (especially if you only leave a voice mail message) so you and the firm have a record. If you accept a job offer over the phone, it is usually not necessary to follow up with a letter. The employer typically follows up an acceptance with a letter confirming the acceptance and providing additional information about the position.