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You want to do this before you start law school or for your 1L summer? Either way, sounds like a good idea since you want to be in your hometown (I'm assuming you're going to school elsewhere). And hopefully you can get a public interest stipend from your school to work there.

I worked in South Bend's legal department (not sure if we qualify as mid-sized, but oh well) part time during a semester, thought it was a good experience. It would be a good 1L summer I think.

Yeah it would be the summer before ever starting law school. I'll have to look into the public interest stipend, maybe I'll qualify for one if I pay tuition super far in advance? Another concern I have is that my resume will be too government-oriented, I'll just be finishing a one-year legislative stint at a state capital before taking on this summer job. Will this hurt with private firms come summer after 1L?

Before starting law school they might not take you.
Any public interest stipend through your school is only for students, which you wouldn't be until you matriculate.
Almost everyone does public interest their 1L summer, it doesn't hurt you for biglaw at all.

I worked for a city's legal department for my 1L summer. It was an interesting experience and a good introduction to real legal practice. Cities often deal with a wide range of legal issues, so it can be helpful for figuring out which areas of law you might want to practice.