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Despite a rosy last couple of years for much of the legal industry, some law firm leaders are  expecting a sour dose of economic reality.

In its latest survey of law firm leaders' confidence, Citi Private Bank's Law Firm Group found optimism relatively lacking, with declines in nearly all measured categories since the bank last polled leaders in July 2019.

The survey includes of 59 firms in the Am Law 100, 46 in the Second Hundred and 52 firms from outside the Am Law 200.

The survey was conducted in October of 2019, and according to Gretta Rusanow, Citi Private Bank Law Firm Group's head of advisory services, the responses reflected a time when the U.K. elections had yet to take place, Hong Kong protests were in full swing and many were primed for a full-on recession.

Using a 200-point scale with 100 being officially neutral, Citi found a drop of six points in "overall confidence" in the legal industry compared to July 2019. The confidence factor currently sits at a slightly "positive" 109.

Confidence in the U.S. economy dropped more significantly.

Leaders' confidence fell by 18 points from the previous survey, dipping to 87. Fifty percent of the respondents expected the same economic showing as 2019, while 38% thought things  would be worse in 2020.

Firm leaders' confidence in the global economy didn't fare much better, showing a 17-point drop down to a confidence level of 76. In this breakdown, 43% of respondents thought the global economy would perform similarly to 2019, while 49% thought it would be worse.

Respondents have predicted doom and gloom before, only to see the industry's fortunes rise. In 2019, which was a strong year for the legal industry overall, leaders in this same Citi survey lowered their expectations for the year by 15 points, to 92, compared to midyear 2018.

That isn't to say the economic threats aren't real. The World Bank's Global Economic Prospectus is anticipating 2.5% overall economic growth, slightly above 2019, which was the slowest growth year since the recession. The report says that the "balance of risks is to the downside."

Global mergers and acquisitions activity, the bread and butter of several of Big Law's largest firms, was down in 2019, and according to analysts the sector will most likely deliver a similar performance in 2020.

The stock market, which defied expectations and continued its unprecedented climb in 2019, is slated for somewhat of a regression to the norm, according to analysts.

All of this together has guided law firm leaders to lower their confidence, compared to the most recent report, for demand (-4 points), realization (-2 points), revenue (-6 points) and net income (-4) headed into 2020.

Still, for all of the confidence points being slashed, firms for the most part are still expecting growth.

Only 8% of respondents said they thought 2020 would bring a decline in revenue, and only 12% thought there would be a decrease in demand for legal services.

One not-so-bright spot was realization, with 73% of respondents suggesting either no growth (54%) or negative growth (19%).

On the head count front, firm leaders showed an increase in confidence (+7) for full time equivalent equity partners, FTE non-equity partners (+7) and associates (+4).

Rusanow said that, as in previous surveys, respondents were somewhat wary of the macro-economic conditions around them but confident in their own firms' ability to generate business, revenue and grow head count.

"Head counts are up," Rusanow said. "That means firms are investing in the future."

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