Yesterday LSAC announced the total number of LSAT tests administered for this admissions cycle was down 16.2% from last year, from 150,050 to 129,925. BTW this does not mean this many people took the LSAT, since multiple test-taking within the same cycle has become very common over the past few years, ever since LSAC stopped averaging multiple scores, thus allowing schools to report an applicant's highest score for the purpose of preserving their precious medians.
We can pretty confidentially extrapolate the total number of applicants in this cycle from the number of LSATs administered, since that ratio was 50.8% in both 2010 and 2011. So we should anticipate about 66,000 law school applicants this cycle, which would represent nearly a 25% decline in the course of the past two years.
These numbers would wreak havoc with law school admissions if law schools kept their admissions standards constant. Two years ago 69% of applicants were admitted to at least one school, and 18% of admitted applicants didn't end up enrolling (2010 is the most recent year for which these percentages are available). Retaining those ratios would yield a total of 37,300 matriculants for this year's class at ABA schools, i.e., a shortfall of about 27.5% relative to the total 2011 entering class.
Since large numbers of lower-tier schools, which are heavily tuition-dependent, could not reduce the size of their classes on anything like that scale without wrecking their balance sheets, they will engage in some combination of cutting admissions standards, decreasing class size more modestly, and cutting their operating budgets. This will especially be the case at the 20 or so proprietary ABA schools who can't ask central university administration for a break on the skim, that is, the portion of law school revenue extracted by central for the law school's share of general university expenses -- this is a legitimate operating expense like any other -- and, more controversially, for cross-subsidization of other university programs (the extent to which such cross-subsidization takes place appears to vary widely across universities, and there are indications it's declining as law schools come under increasing financial pressure).
It seems unlikely that any of this will have any immediate fiscal effect on elite schools, where demand for admission will remain relatively high -- this article quotes Michigan's admissions director to the effect that applications are down only five percent this year, although it should be unnecessary to emphasize that anything such people say needs at this point to be taken with a pillar of salt -- and whose budgets are not as tuition-driven as those of lesser schools. Hence the elites are for the present likely to continue the grotesque spending spree they've indulged in over the past decade in particular, thus putting continuing pressure on the sub-elites to do the same, and so forth on down the line.
But at some point down that line a harsh fiscal reality is already kicking in for schools that aspire to be a homeless person's Harvard. And it seems likely that point in the line is going to be moving up the law school hierarchy at a brisk pace.