It is absolutely true.
In Top law schools, you can keep your scholarship just by maintaining satisfactory academic progress .
Further down the pecking order, keeping your scholarship is based in gpa and ranking. In law school your entire grade for the term is based on the final (nothing else). For all finals there is blind gradeing so professors do not know whose papers they are grading
@PurpleTitan is also correct that at some law schools, all of the scholarship students are placed in the same section, having to battle it out to keep their scholarship