Leaders at large U.S. law firms are cautiously hopeful about the next 12 months, showing slightly more optimism about profits, revenue and demand for business than they did most of last year, according to a survey of 79 managing partners of law firms.

Managing partners’ confidence in the economy and business conditions in the legal industry improved marginally in the first quarter of 2014 compared to the previous quarter, according to the Managing Partner Confidence Index by Citi Private Bank Law Firm Group. It is the second quarter in a row that law firm leaders have expressed more optimism about business — a notable change from the mostly gloomy outlook they had during the first three quarters of 2013, when many law firm leaders were feeling less confident about profits and revenue.

Law firm leaders showed the most optimism about demand for legal services, with two-thirds of managing partners expecting demand  to grow over the next year. They were also bullish about profits and revenue: 71 percent expect profits to grow between 1 and 10 percent over the next year, and 80 percent expect revenue to grow between 1 and 10 percent over the next year.

However, most managing partners (61 percent) also expect expenses to grow between 1 and 10 percent, and were nearly unanimous (97 percent) about expectations that they would offer the same or more discounts to clients over the next year.

Citi’s Managing Partner Confidence Index comes out every quarter, and is a forward-looking benchmark that surveys the expectations of managing partners about the economy and the legal profession for the next 12 months. Of the 79 managing partners who responded, 52 were from the 200 largest U.S. law firms, 23 were from niche firms and four were from U.K.-based firms. Managing partners give scores for several categories on a scale between 0 and 200: 0-99 for “lack of confidence,” 100 for “neutral” and “101-200” for “confident.”

Here’s how they responded in all categories:

  • Overall confidence: 115 (up 6 points compared to 4Q 2013)
  • Economy at large: 123 (up 7 points)
  • Business conditions in the legal industry: 114 (up 8 points)
  • Profits: 101 (up 5 points)
  • Revenues: 111 (up 4 points)
  • Expenses: 120 (down 3 points)
  • Demand: 138 (up 2 points)
  • Discounting: 81 (up 6 points)
  • Hiring: Mixed. 114 for equity partners (up 2 points), 132 for associates (down 1 point)