How Legal AI Can Strengthen Canada’s Economic Competitiveness

Canada’s economy cannot grow without legal expertise, and our legal system cannot keep up without artificial intelligence. Law underpins everything, from contracts signed to every compliance box checked, every risk managed. Companies cannot grow without reliable and efficient access to legal expertise. However, our legal system is outdated, risk-averse, and slow to adopt the very tools that could unlock the next wave of economic growth.

Artificial intelligence offers a once-in-a-generation chance to modernize law. Yet Canada is lagging in AI adoption across the board, and if we fail to move quickly, our legal sector—the backbone of our economy—risks becoming the bottleneck that holds us back.

Where Does Canada Currently Stand?

When it comes to the implementation of AI, Canada’s been dragging its heels. As of mid-2025, only 12% of Canadian businesses had integrated AI, placing Canada at the bottom of all OECD members in AI adoption. OECD data also shows Canadian companies apply AI to fewer use cases than their global peers. 

Meanwhile, other nations are moving fast. Earlier this year, the United Kingdom launched an AI Opportunities Action Plan, laying out 50 comprehensive measures to make the UK a desirable destination for AI companies. The International Monetary Fund estimates that if AI is successfully adopted, the UK’s productivity would see a boost of 1.5 percentage points a year, adding up to £47B to the UK’s economy annually. 

Canada is moving in the opposite direction. Our productivity declined by 1% as of Q2 2025. In a world where other nations like the UK are using AI to accelerate growth, Canada cannot afford to keep dragging its heels.

What Challenges are We Up Against? Mindset.

The technology is available, but Canadians are hesitant. There’s a clear knowledge gap on how AI works, with 79% of Canadians being concerned about negative AI outcomes, despite only one in four Canadians being trained on how to use AI. 

We can also look to where AI ranks as a priority—only 8.3% of Canadian businesses reported AI investment as very important, but a staggering 41.2% reported it as not relevant.  

This mindset is particularly worrisome in law. As both a lawyer and now the leader of a legal AI platform, I’ve witnessed the hesitation firsthand: firms avoid risk, no one wants to be first, and innovation is postponed. However, the cost of inaction is steep. Without legal AI, every contract, every case, every transaction slows down. And when the law slows down, so does the entire economy.

Why Legal AI Matters Most

Law is not just another industry. It is the infrastructure of our economy. Contracts govern business, compliance regulates markets, and risk management shapes investment. Innovation in every sector depends on legal expertise to move forward.

Yet the legal industry is one of the most technologically outdated. Lawyers still rely on manual processes, billable hours, and precedent systems that date back decades. That inefficiency doesn’t just affect lawyers; it affects every business that needs a contract renewed, every startup waiting for a financing agreement, and every court system clogged with delays.  

AI can change this. Integrated into legal workflows, AI can reduce systemic costs, improve access to justice, accelerate business productivity, and unlock faster decision-making across the economy. In short, if Canada wants to lead in AI, it must start with law.

What are the Risks of Falling Behind?

Some might argue that law should be cautious about AI, given the stakes, but the real risk is failing to act. The rise of “Shadow AI”—employees using tools like ChatGPT at work without approval—illustrates the dangers. Without secure, industry-specific solutions, professionals turn to open-source platforms that expose companies to misinformation, cybersecurity threats, and liability. 

In law, those risks are magnified. Imagine false information slipping into a case filing or confidential client data leaking into the public domain. The solution isn’t to avoid AI; it’s to develop Canadian legal AI tools that are accurate, secure, and tailored to our needs. 

We’re Making Progress, but Not Enough

There are promising signs. The appointment of Minister of AI and Digital Innovation Evan Solomon shows a federal commitment to accelerating adoption, boosting productivity, and creating jobs in Canada’s AI sector. Programs like the Regional Artificial Intelligence Initiative and the Business Scale-up and Productivity program are steps in the right direction.

Prime Minister Mark Carney has also confirmed AI is a top priority, asking his Major Projects Office to develop a “Canadian sovereign cloud”. While focused on national security and sovereignty, this will also support AI infrastructure at home. 

These initiatives remain broad. To truly unlock economic growth, Canada must incentivize AI adoption in law specifically. Without legal innovation, every other sector will remain constrained.

What Canada Must Do Next

1. Incentivize legal AI adoption. Governments should fund pilots, tax incentives, and procurement opportunities that encourage law firms and legal departments to integrate AI into workflows.
2. Invest in talent. Canada must attract and train top AI researchers and legal technologists who can develop secure, trustworthy tools tailored to our legal system.
3. Support business-led innovation. Businesses are on the frontlines of implementation. Legal AI tools that cut costs, speed decisions, and improve employee productivity should be prioritized.
4. Build secure infrastructure. Initiatives like the sovereign cloud must directly support legal applications, where privacy, security, and accuracy are paramount.
   
   

The Bottom Line

Law is the foundation of Canada’s economy. Without modern legal systems, no sector can innovate quickly or securely. Right now, Canada risks falling behind while nations like the UK and the US move forward with clear strategies and aggressive adoption.

We have time to catch up, but only if we act decisively. Canada must lead in legal AI. If our laws remain outdated, so will our economy. But if we invest in secure, homegrown solutions today, we can transform law from a bottleneck into a catalyst—unlocking innovation across every sector and writing the rules for the future, instead of following them.