most of the largest firms in the country tend to recruit from "elite" schools which are nearby (i.e. largely in the Northeast)
This is incorrect. MOST (though not all) of the top firms interview at the top schools across the country. Check out UT's OCI list for one example (or Vandy, etc.).
Also, one of your arguments implies that a school is "elite" because of who interviews there, and not that a firm interviews there because the school is "elite." You also seem to indicate that proximity to BIGLAW helps in making a school elite, and again, that doesn't hold (see Michigan and Stanford in the Bay area, which prior to Silicon Valley was hardly a legal or even business hotbed). In fact, the common factor that many use to define a school as "elite" is that it is "national." National would generally mean that the name holds across the country, and consequently, firms come from across the country to recruit there.
And while I generally agree with what you are saying about education, I think this is a bit off as well. Firms don't quiz you on the Rule Against Perpetuities during interviews. They use the school reputation and your class ranking for that for the most part and use that to determine if you even get the interview. Most interviewing will cover personality, career desires, organizational fit, etc. (note: this is somewhat different for patent law, admittedly), and not specifics of your education.
1) Most of the largest lawfirms in the nation are located in the NE, and if you look at the attorney bios at those firms, you will discover that the majority of them came from schools in the NE (and a few from schools which we already deem to be "elite" but are not local). Though they may recruit from other schools, they tend to hire more from local schools. This is why Harvard, Yale, Columbia, NYU, Penn, BU, BC, Fordham, etc. send more lawyers to firms in NYC, Philadelphia, and Boston than UTexas. This is precisely why I said that one who wishes to work in "Big Law" may want to re-consider Austin. (Don't immediately abandon the whole idea, but just give it another thought.)
2) One cannot make the distinction between being "elite" on account of the firms which recruit at a given school and having distinguished firms recruit at that school because it is "elite." This is a very cyclical, symbiotic process. First, a school must demonstrate a certain level of academic excellence and achievement in the field, and then major firms will begin to notice the school. Consequently, those major firms will begin to recruit more heavily from that school and thusly augment the institution's reputation. As the school's reputation improves in accordance to the firms to which it sends graduates, then the school receives more applications and consequently becomes more "selective." Moreover, that same school will then tend to attract higher quality faculty, and the process of becoming "elite" thus proceeds.
3) The Bay Area has been a focal point of business in the US for well over 100 years. This was, of course, a direct consequence of its settling during the CA Gold Rush and its continued use as a major port. Wherever business of that magnitude thrives, large law firms will inevitably arise. Long before Silicon Valley and IP Law became popular, one of the largest fields of legal study was merritime law, and San Francisco has always been a center for said practice. Thus, I believe it is misguided to claim that Stanford did not reside in very close proximitiy to a legal center of this country. I could apply the same argument to Detroit and its relative proximity to the University of Michigan.
Just because it's Friday, I'll keep playing along.
1. It cannot be doubted that BIGLAW is centered around the Northeast, and specifically NY, and that is unlikely to change in the next 20 years. However, I disagree that a NY firm is more likely to take a BC grad generally over a UT grad of equal class rank. Dallas and Houston are very large legal markets and most BigLaw firms have offices there (it doesn't matter where they are headquartered). Those offices love UT grads. I'm not going to look up the overall numbers of lawyers by state but you could actually do QUITE well by going to UT if you want to do BigLaw in Texas. If you are looking for Wachtell, Cravath, etc., it doesn't really matter anyhow, though. If we are talking about PRACTICING in Austin, then that's a whole different ballgame. That one is hard (though it is exactly what I am setting myself up to face, unfortunately). In this case, though, we are talking about education (I think).
PS. Skadden and Jones Day (by a long shot, though they are based in Cleveland) each had more UT lawyers on staff than from BC or BU. I am sure that is different for many firms, but just using that to disprove the need to be in the Northeast for law school for the ones you mentioned that are not long standing Top 10 schools. Fordham has always been a good place to go if you know you want to be in NY, no argument there.
2. Symbiotic... sure, but this is not a chicken and egg situation. It is the school that determines things in the long run, not the presence of top firms recruiting. For proof, see Howard.
3. We have probably gotten off course here. I love San Francisco, but to say it was any more of a business center in the early part of this century than Dallas and Houston have been for the second half of this one is stretching things. Also, New Orlans has had much more of a maritime industry (and Houston has a much more active port, though I can't swear for how long). The Detroit (and auto industry growth) angle was a good point on UM I had forgotten. Anyhow, Texas and it's business activity via the energy sector matches most anything outside of NY, Chicago, and California. To say all BigLaw activity takes place in those 3 locations only would be very mistaken.
Anyhow, law is a business, and business follows money. Texas and the Sunbelt are expected to be (generally) the fastest growing economic regions over the next. To assume everything will remain status quo could be foolish.