I think more people will apply to law school if the general belief is that jobs will be scarce. On the flip side, fewer people will probably be able to attend law school even if they get in because of the scarcity of credit.
Hopefully the credit mess will prevent people from going to law school at overpriced private universities that provide little if any value. The easy money that was available in my era (2002 through 2004) resulted in far too many people accumulating 100k+ worth of debt for a TTT degree.
I also want to add this: People in my day went to law school when the economy was down. We hoped that when we graduated, the economy would be booming and there would be lucrative jobs for all. Sadly, this turned out not to be the case. The anointed top 15% + law review got biglaw jobs, and the rest of us were left to struggle on 35-50k/year at bottom barrel firms or government offices. Many of us turned to document review out of financial desperation. The crushing hours and low salary of the small firm and insurance defense sweatshop pushed many to the brink of disaster.