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Amid economists' jitters and the Federal Reserve's uncertainty over the U.S. economic outlook, law firm leaders remain generally confident about the strength of the legal industry for the second half of 2019, according to a survey by Citi Private Bank's Law Firm Group.

Nevertheless, law firm leaders showed less overall confidence than they did headed into the first half of the year, according to Citi's latest Law Firm Leaders Confidence Index, released Friday.

Despite relative optimism about the U.S. economy, respondents in the latest survey were less bullish than they were six months ago about the prospects for head count growth, especially at the equity partner level. Confidence also decreased modestly in expectations for demand growth and increases in realization rates.

Overall confidence levels have remained somewhat low since the second half of 2016. Still, 81% of survey respondents, who are top leaders large law firms, said their confidence was the same, somewhat better or considerably better than during the first half of the year.

The index scale tops out at 200, and everything above 100 indicates confidence. Overall confidence decreased one point to 115 from the first half of 2019, while confidence in the U.S. economy increased one point from last half to 105. This comes at the same time that the Federal Reserve has expressed anxieties about the U.S. economy and has signaled it might cut federal interest rates soon.

Gretta Rusanow, who leads the law firm group advisory team at Citi, said the generally positive index values signal that the legal industry does not expect a recession this year. Survey respondents reported feeling more confident about the U.S. economy than the global economy. Although confidence in the global outlook ticked up two points for the second half of the year, it still remained below the neutral score of 100, at 94.

“They're betting more on domestic market than the overseas market,” Rusanow said of law firm leaders, noting the majority of firms surveyed were still planning to grow in the second half of the year to meet demand. Confidence in demand ticked down two points from the beginning of the year but remained the second-highest index score in the survey, at 132.

Law firm leaders also tempered their expectations of net income growth and head count growth from earlier this year, which had a “slow start,” according to Rusanow, partially due to the government shutdown, among other economic factors. She said there was an “uptick in activity” during the second quarter of the year, leading firms to continue to be optimistic about the rest of 2019. The survey also pointed to higher confidence in revenue growth.

“[The data] supports what we've been hearing anecdotally,” she said “The takeaway is that the industry remains optimistic about the second half of the year.”

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