Among the many unfortunate developments in higher education over the past decade, one of the most talked about has been the law school bubble. In the heat of the recession, a record number of students decided that it would be a good idea to dive six-figures into debt for a shot at a legal career. Many were lured with utterly misleading job placement stats, as well as a stubborn misperception that law was still a safe career choice, that a J.D. even guaranteed a living wage. Once they graduated, many realized otherwise. 

Last month, the Law School Admissions Council (a.k.a., LSAC) published data indicating that the bubble finally seemed to have popped -- a merciful development, as I put it at the time. The number of LSAT tests administered has plummeted over the past two years, and fewer students are accepting admission. This is a happy turn of events. The fewer grads being funneled into an super-saturated industry, the better. (Full disclosure: I used to work for a law firm.)

Yesterday, LSAC released a new bit of evidence* that law school has finally lost its luster. Applicants are down more than 15 percent for the year. But there's one problem: The wrong students have stopped applying. 

Take a look at the chart below, which shows the number of applications from prospective students in each LSAT range for 2012. Here's the take away: The number of students applying who probably have no business going to law school has dropped the least. The number of students applying who probably should be going to law school has dropped the most.  

Here are a few rough rules of thumb on LSAT scores. To get into a top 50 law school, you need roughly a 160, give or take a few points. To break into one of the vaunted Top 14 programs -- yes, this really is all based on U.S. News Rankings...welcome to the industry -- you realistically need something closer to at least a 165. Once you start looking at the super elites, you're talking 170 and above.

And yet, the smallest drop in applications has been among test takers who scored below a 144, the ones least likely to get into a reputable program. Now, some of these students probably need to go to law school for the good of society. I mean that sincerely. A lot of them likely come from less affluent backgrounds, and will likely be willing to work for small firms and government offices that provide services for people who cannot afford to hire Williams & Connolly every time they need legal help. These are your small town lawyers, your inner city lawyers. But just because a few of these potential students need to get a law degree doesn't mean all of them should. And many will likely be heading to J.D. mills that offer them a coin-flip's chance of getting a job after graduation.  

Meanwhile, take a look at students in the 170-174 range, which is down by more than 20 percent. What does that tell us? It says that fewer people who are smart and hard working enough to even get that score are probably taking the LSAT, and even if they are, they've heard enough terrible news about the legal economy that they've chosen not to apply. Now, a 170 on your LSAT does not guarantee you a future wearing pinstripes and wingtips. I know more than a few young graduates of elite law schools who have struggled to find work. But if you're good enough to hit the magic 70 mark, it means you stand a better chance than most of surviving in today's law market. 

So the smart kids got the memo. Law school is largely a losing game, and they're not going to play, even though they can probably count on a better hand than most. Meanwhile, the number of laggards applying has barely budged.

Maybe that's just what makes the smart kids the smart kids. 

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*Thanks to Steve Schwartz of the LSAT Blog for the heads up on the release.