Although I am a huge proponent of typing the bar exam (and, in fact, I typed during both of the bar exams that I have taken), I will discuss what I believe are the pros and cons of each method. Then, you can make up your own mind.
All bar jurisdictions of which I am aware permit examinees to take the bar exam using a laptop computer. This requires the examinee to purchase overpriced exam software ($150 or more for a single exam) to secure his or her computer during the exam. The added expense is worth it.
In my opinion, typing the exam on your computer is the clear winner. Most people that I know can type much faster than they can write by hand. I am no exception. In fact, I actually believe that I can think better when I am typing that when I am writing something long-hand. This is especially true when in an exam setting that demands quick regurgitation with minimal analysis. If I am ruminating about my place in the universe, well, then, maybe I'll use a pencil and paper, especially since doodling helps me contemplate.
If you have taken all of your law school exams on a computer and have taken all of your outlines on a computer, then your brain is used to thinking about the law with a keyboard in front of it. DO NOT change this for the bar exam. Habituation is important to the process of studying and exam performance. Anticipate conditions and practice under those conditions.
There is, however, at least one negative to typing the exam: a computer glitch. At every bar exam, there are at least a handful of people whose computers crash, break, or otherwise fail to perform as expected. This is terrible. If you are anticipating taking the test on your computer, and it crashes in the middle of a performance test, you will likely freak. This is an argument for using pen and paper.
Of course, if you practice writing a few essays by hand during your studies, then you will be prepared for this. I wrote a few essays and one entire performance test out by hand during my studies for the California bar exam to prepare for this eventuality.
Even with this fear of computer mayhem, I personally cannot imagine that I could have written enough or well enough or legibly enough to have passed a bar exam had I been hand-writing. (Of course, there are some who can do it -- see comments to this post.)
[Note to MAC users: I have known a few MAC people who borrow a beat-down 5-year-old PC on which to take the bar exam. Then, because the computer has sat unused in someone's closet for the past year, the computer crashes during or shortly before the test. Don't let this happen to you. As far as I know, the exam software that all bar jurisdictions use is for PCs only. So, you will need to have access to a working PC. Since you can get a laptop for a few hundred dollars, I suggest you buy a new one if you can't borrow something less than two years old. It is worth the expense for peace of mind. There is another option, which is to run some sort of PC emulation software on you MAC. I have no idea how to do this or how stable this is, so do this at your own risk. If someone has done this, please post a comment.]
[UPDATE: One commenter has stated that MAC users can now get bar exam software for their computers, so no need to use a PC if you don't have one.]
The only advantage I can see to this method is that you do not have any chance of a computer crash. Seriously, unless you have cramp-less hands or are a luddite, I cannot imagine how writing the exam by hand can be of any advantage.
Of course, if you have such a severe phobia of computer crashes that will keep you from performing at your peak during the exam, then by all means, hand-write the bar.
If anyone out there can think of any other benefits to writing the exam by hand, please post a comment.
[UPDATE: Based on one of the comments to this post, I should add that if your thoughts flow better when handwriting and you feel that you can handwrite the volume of words needed on a bar exam, then you should hand write. The key is using the tool (computer vs. pen) that YOU believe will get you the best result on the bar exam.
My judgment here may have been a bit harsh and does reflect my bias in favor of typing, though I do like to handwrite when I am thinking creatively, I do not like to handwrite when I am taking tests or explaining information gathered through research.]
[Photos: bigpresch and kevinzim]