1. It contributes (if sometimes obliquely) to the stock of useful knowledge in the world, on which long-run economic growth depends.
2. It is a significant contributing factor to a law school's reputation in the wider world, which indirectly benefits students and alums.
3. Anecdotal evidence suggests that teachers who are involved in scholarly discussions within their areas of teaching are better teachers, which directly benefits students.
4. Legal scholarship provides the socially important service of assessing the quality of judicial opinions and administrative decisions, among other government activities.
5. Legal scholarship provides intellectual and evidentiary bases for or against law reform efforts.
Feel free to add to the list in comments.