A recent National Law Journal article describes a trend of increased lateral movement among faculty at top law schools. The article does not actually cite any hard data for the proposition that there is such a trend. Instead, it quotes various faculty and deans about the number of moves and refers to Brian Leiter's blog. It certainly looks like there is a great deal of movement, but it would be useful to know whether, as a percentage of faculty size, there actually has been an increase in lateral movement in recent years, and if so, by how much.
Whatever its exact scale, the NLJ article and Professor Leiter attribute a substantial portion of the increased lateral movement to deliberate faculty growth at Harvard and Columbia, and to the resulting trickle-down effect. Both Harvard and Columbia aim to increase their range of scholarly expertise and decrease their student/faculty ratios. As a Harvard alum and especially as a Columbia faculty member, such growth is of more than theoretical interest to me.
For the most part, it's win/win. A larger faculty without a larger student body means smaller classes, which is good for students and faculty alike. Faculty growth could have a number of downsides for faculty. One is dividing up the financial pie (salary, perks, etc) among a larger number of faculty, thus resulting in smaller pieces. This is likely to be more of a theoretical than a real problem, however. Deans can and apparently do have great success raising money from alumni for bringing down student/faculty ratios, and so faculty growth is likely to be accompanied by revenue growth.
Another risk is diminished faculty quality, in much the way that expansion of professional sports leagues dilutes the talent. I'm highly dubious of this effect too, because the talent pool in legal academia is quite deep. Even law schools with relatively unimpressive student bodies by numerical criteria typically have excellent faculty. (They also have many excellent students as measured by other relevant criteria.)
Another potential but not actual risk of faculty expansion is the loss of collegiality and self-governance. I say this is not an actual risk because all law faculties are already too big to have productive committee-of-the-whole discussions; the ideal size for such discussions is about 7; even a small faculty has 25 or so members. But no law faculty is at risk of becoming so big that it can no longer function as a cohesive entity. If I recall correctly, the maximum size of a functioning organization in which face-to-face operations can still work is about 300. (My source is Malcolm Gladwell's The Tipping Point. "Mega" law firms are not a counter-example. They typically do not have more than 300 lawyers in any given location, and are further divided among practice groups.) Law faculties are well below that number, even when one includes professional administrators.
The real risk of faculty growth is over-expansion. This past year saw fierce competition for admission to college, and so the enrollment picture for law schools looks good for the short to medium term as the "echo Boom" babies enter their twenties. But if the U.S. population starts to decline in the next 20 years or so, U.S. law schools could find themselves in the same position in which Japanese universities now do: facing shrinking applicant pools and having to compete by offering the best hot tubs. (See story here.)