The digital systems are direct continuations of the paper ones. For example, federal court opinions are published on a court's website in PDF form. West Publishing collects them and prints bound volumes of the Federal Reporter. In parallel, it pulls the text of the opinions into the Westlaw online service, and incorporates the pagination of the printed versions by embedding starred page numbers into the text.

Also, West still categorizes the digital system using the index developed for paper cases. Using this index is usually faster than using search queries. In fact, search really doesn't work very well for legal research, and Google-like free form search works particularly badly (it tends to take you to highly-cited cases rather than highly-relevant ones). I generally start my research by looking up the topic in the digital version of a printed treatise or legal encyclopedia and then doing a reverse citation search of the listed cases. Failing that, I'll do low-level search queries (e.g., "foo" within N words of "bar").

But the only time I ever actually used a book was when I was working for a judge. Every now and then West screws up and the pagination differs between the digital and printed versions of the Federal Reporter. So we'd do our final cite-check using the printed volumes.

Law librarians have been complaining for years about the expense of the old paper systems, especially since the companies who produce them keep increasing the price for updates every year. Almost everyone I know now uses equivalent digital systems, although where I work many older lawyers often ask for paper copies of things after you've found the most relevant cases/laws/rules.

As Rayiner says the same systems have digital equivalents now. I'm not a lawyer nor a law student any more (I quit during the 1l year for personal reasons) but I'm still very much into it intellectually. When I'm not in a hurry or just trying to get a grasp of some issue, I much prefer doing it with the books or specialist journals, plus I take a lot of handwritten notes. Walking the stacks and the time/volume limitations of handwriting make for a more enjoyable learning experience. I'm not sure it's necessarily more effective, but I really enjoy the peace and quiet of a library. The less popular the paper books become the more I like it.

The downside though is that many law firms just don't have a good reason to keep up their (expensive) paper-based collections any more, to the point that some actually give the whole lot away to anyone who's willing to box them up an take them. In a decade you'll have a hard time finding a paper library if you don't live near a university, as they're expensive to maintain and fewer towns/counties are bothering to keep them. I've thought about taking up one of these offers before but I don't want to end up on a TV show about hoarders :-/

They've been virtually entirely replaced by digital systems. I graduated from law school a few years ago and we were not taught to use a book-based system to do research. Some much older attorneys use books, but they hardly ever do research anyway, since they have young guns to do it.