I know two New York City law departments that each year bring in a couple of third-year law school students as interns. The departments pay them a very modest stipend and try to find them tasks that are interesting and useful.
This is a commendable process. Law school students will welcome something more meaningful to do and they can be low-cost manpower for a department. The interns can take on administrative tasks that need completion. Over time, too, if more law departments introduced law students to the in-house alternative, the flow of talent into law departments would continue to improve. Even if those students never join a law department, as practicing lawyers they will have a smidgen better understanding of the in-house life.