Over the past couple of decades, law school financial aid has shifted almost entirely from a need-based to a "merit"-based model. With the notable exception of the three top schools (Yale, Harvard, and Stanford), the vast majority of scholarship and grant money -- a total of about one billion dollars per year -- is given out on the basis of an increasingly intense scramble to secure students with higher GPA and (especially) LSAT scores than a school's key market competitors.
It works like this: say the median LSAT score for students at Chicago is 170 while at UCLA it's 167. An applicant with a score of 169 is going to get no scholarship money from Chicago, but will be offered a substantial discount to attend UCLA. (Roughly speaking, the "bottom half" of a law school class, as determined by the all-important median LSAT score, gets no or nominal scholarship discounts, while the top half gets increasingly larger amounts as one moves up the admittance hierarchy, with someone at the 75th admittance percentile getting a 50% tuition discount, and someone in the 95th getting all or almost all of his or her tuition waived).
It will be seen that whether this student attends Chicago or UCLA will be strongly determined by the student's socio-economic status. A high SES student is far more likely to pay full boat at Chicago, while a middle class student (needless to say, working class and poor people don't go to fancy law schools, except for the three people in every entering class who are there precisely for the purpose of allowing law schools to claim they pay attention to economic diversity along with all the other kinds) faces a much harder choice between going to an elite law school and taking on $200,000 in high interest non-dischargeable debt, or taking on perhaps half as much debt to attend a sub-elite school.
If the middle class kid goes to Chicago, she will be subsidizing the educations of everyone who is paying less than full tuition (almost all reduced tuition at law schools is a product of cross-subsidization rather than endowed scholarships per se). And, perversely enough, a large proportion of those subsidized students will come from much higher SES brackets than she does, because of the innumerable ways in which a high SES background makes it far more likely that one will end up with a very high LSAT score 23 years after one's birth in our increasingly stratified plutocracy. (If you need this latter point elaborated go read some books, or at least some Paul Krugman columns).
So upper class status status reinforces itself both because upper class kids can afford to buy elite educations (a shockingly high percentage of graduates, between a third to a quarter, graduate from elite law schools with no law school debt; keep in mind that full tuition scholarships are generally given to less than ten per cent of the class, and tuition plus COL stipends are far rarer), and because they are more likely to have their educations subsidized by other (on average lower SES background) students. In addition, as both Tamanaha and commenter below point out, the students who are being subsidized are the most likely to end up with well-paying (at lower-ranked schools, simply "paying") jobs, while those doing the subsidizing are precisely the people who will on average end up in a worse economic circumstance, even without taking into account the larger debt they're incurring relative to their more favored classmates.
This same pattern reoccurs all along the law school hierarchy. The student who is offered no money to attend UCLA will get a big scholarship offer from Loyola. The student who is offered no scholarship money by Loyola will get a big tuition discount at Chapman. And so forth.
All of this, of course, is yet another pernicious effect of the sordid scramble to advance or at least maintain one's relative place in the "all-important" USNWR. 15% of a school's ranking is essentially a function of the student body's median LSAT score. Tamanaha emphasizes, in his modulated and even one might say understated way, the sheer absurdity of the situation: the surviving rump of an otherwise defunct news magazine has somehow managed to call the tune to which all law schools dance, because prospective law students are obsessed with these rankings. (The total emptiness of the rankings as an actual measurement of anything other than their completely self-referential circularity is illustrated by the fact that the same 14 schools -- out of 200! -- have remained in the "top 14" since the beginning of this imbecilic system more than 20 years ago).
Why does all this matter? Law is a status-obsessed profession, and it becomes ever-more status-obsessed the higher one gets in the legal hierarchy. It's no longer possible to get on the Supreme Court without having attended Princeton and then either Harvard or Yale. It's no longer possible to become a partner at Wachtell without having attended HYSCCN (How pathetic is it that you and I know what that acronym stands for? Answer: very). It's extremely difficult to even become a legal academic if one went to a law school below the what the rump wing of a bankrupt news magazine has declared to be the 98th percentile of legal academia.
If legal education is structured to all but intentionally funnel as many upper class people as possible into the tiny number of "slots" from which one must emerge in order to inhabit the upper reaches of the profession, that's a problem -- at least for people who consider class status in America today to be a reflection of something other than a combination of divine election and Darwinian destiny.
A final note: Some people may think it doesn't matter all that much whether that kid goes to Chicago or UCLA. I mean they're both "top schools," relatively speaking, aren't they? Yes they are. On the other hand, here's an email I got yesterday from a UCLA 3L (I get several things like this every week):
I consider myself to be one of the ones duped; I have absolutely no job prospects with my 3.4 GPA which is probably only around "average." This is despite the rosy picture UCLA presented about median private practice salaries of $150,000 - what you don't notice is a tiny asterisk which says that's only for firms of 500 or more attorneys. And what they don't tell you is that only 20-30% of you will get those jobs. And by the way, who gets those jobs is entirely determined by first-year grades, because that determines where you "summer" after your 2L year, and that's your only way to get your foot in the door. At the time all I thought was, "Gee, UCLA's a high-ranked school, and if the guy in the middle is making that much, I'll at least be able to do that well and law school will be a good investment!" It's a sad state of affairs when, for the time being at least, I will probably be able to make more on an hourly basis continuing to teach the LSAT than actually being a lawyer.)This reminds me that whether one gets an all-important second year summer position at a big law firm is affected by factors beyond how well you did on a handful of all-important first year issue-spotting exams: factors such as whether your family might be in a position to affect whether a non-trivial amount of business gets thrown that firm's way somewhere down the long and winding "merit-based" road all of us are supposedly traveling. (Cf. this comment. And this one). But that's a subject for another day.