I e-mailed Leiter this thread (he has answered my questions before), and here's what he wrote back:
I was surprised to see a reference to an "aging faculty"; the opposite is the case, which may be part of the problem as to 'perception.' There are very few full-time faculty over 65 (Landes, maybe Helmholz, maybe Epstein), while the cohort, for example, of law & economics faculty in their 30s and 40s is pretty clearly now the best in the country--including now the latest addition, Omri Ben-Shahar, who directs the L&E program at Michigan. This is a cohort that includes faculty who have turned down offers from Harvard and Yale, among other places--but, for understandable reasons (they are younger, some of their work is quite technical), they don't have as high a profile as someone like Sunstein (but hardly anyone has *that* high a profile). (Sunstein, by the way, is keeping not only his office at the Law School, but his apartment in Hyde Park, so he will be around "a lot," which may understate it. The University of Chicago has an absolute rule barring any U of C faculty member from having two tenured appointments, which is the only reason he is going to be an on-going visiting prof at U of C. His changing from full-time to part-time is a real loss, to be sure, as I noted on my law school blog--among other things, it drops the per capita scholarly impact of the Chicago faculty to 4th, still well ahead of Columbia and NYU.)
Back to faculty age: all the new hires, including the laterals, are in their 30s and 40s, and by my rough estimate, nearly 2/3rds of the full-time faculty this fall will be under 50, which is an unusually high percentage. One thing Chicago has not, and will not, do is hire retired, or almost retired, faculty from peer or better law schools, as, for example, NYU has (rather surprisingly) done on several occasions in the last couple of years.
U of C's location is not a reason people come to U of C, unless it's to be in Chicago more generally, that's fair enough. As a factual matter, though, U of C usually wins the "cross-admit battle" with NYU, for the obvious reasons: it's smaller, more intellectual, and has much better clerkship and academic placement, and the firms hire more deeply into the class. (NYU, by taking such a large number of transfers, is also hurting its reputation with the firms.)
The one factor you identify that is clearly contributing to a perception of "decline" is undoubtedly US News. This year--being #7 instead of #6--was a fluke, resulting from Berkeley's fictional job placement stats. But even putting that aside, being #6 since 1999--despite being top 5 in almost all the main categories (reputation, job placement, LSAT etc.)--is still too low (and being tied with Penn is just silly, as even my friends at Penn admit). In 1999, US News began adjusting expenditures for differences in cost-of-living, and the formula they are using hurts Chicago (together with certain peculiar accounting practices which, I suspect, leads U of C to underreport the actual expenditures, because they go via central university channels). That is the entire reason for the artificially low ranking in US News, and nothing else.
Interestingly, the big expansion in faculty size starting this fall--it will be the largest number of full-time faculty in the Law School's history--will actually help with the US News problem.
Please let me know if you have more questions.
University of Texas, Austin