Like most things in law school, this is just something you have to figure out for yourself. I'm not trying to hide the ball or anything like that, but outlining is a process that helps some people more than others, and likewise some people benefit from outlining early and some don't. I recommend starting fairly early, maybe after the second or third week of classes, because you can always stop outlining and pick it back up later on if it's not working whereas you can't turn back time if you're one of those people who needs to start early and you put it off until the week before finals.
I outlined early my first semester and promised myself that I'd start even earlier in the Spring, but I wound up waiting until three weeks before finals to outline at all and it worked quite well for me. I learn better if I wait until a few weeks before finals to outline, as it turns out. That doesn't mean that it will work for you. I guess one thing you can consider is how you studied in undergrad - did you perform better when the pressure's on and you have to cram, or did you prefer to do a little at a time? Despite what alarmists will have you believe, the study patterns you had in undergrad are as good an indicator as any of what will work in law school.