Law school admissions have fallen by nearly 50 per cent since 2004 according to the Law School Admission Council, a trend that is concerning both the universities and the law profession.

According to the Washington Post, it’s the clearest indication yet of legal academia’s busted business model. For decades, law schools have invested in expensive but underutilized buildings, faculty and administrators, all in the pursuit of excellence as defined by their accrediting body, the American Bar Association. They passed on the costs to students, who paid with borrowed money, confident that law school was a ticket to a high-paying job. Now those jobs are scarce, and the debt-driven law school “value proposition” is in trouble.

This trend is cause for concern not so much for what it portends in the legal profession but for what it may mean for all colleges and universities. Professional schools have been a modest net contributor to affiliated university revenue, so their plight affects undergraduate education.

More important, the law-school business model is an exaggerated version of all higher ed. If colleges and universities can’t control costs, they could experience the same downward spiral as law schools. The United States may get along with fewer lawyers, but future workforce productivity depends on a vibrant higher-education sector.

Alas, recent data on that front suggest that colleges and universities are barely beginning to face the new realities. On Jan. 16, Moody’s Investors Service issued a “negative outlook” for U.S. higher education. It cited sluggish revenue growth on account of increased tuition sensitivity on the part of students and their families — and increased reluctance to incur debt to pay for college — as well as state budget cutbacks and the rise of online learning alternatives.