Few Canadian law firms have fully embraced generative AI tools, a new survey by Best Law Firms shows. Yet many said they are carefully exploring their options, and only a handful are rejecting the use of artificial intelligence in their practices altogether.
The survey, which encompasses hundreds of law firms across Canada, shows that 80% of firms with more than 20 lawyers are either investigating how they would use generative AI tools or have launched pilot projects to experiment with AI in select practice areas.
That said, firms have much work to do to fully integrate generative AI into their workflows. Just 7% of the firms surveyed said they have completely implemented artificial intelligence tools across multiple practice areas. As for holdouts, 1in 10 said they have no plans to adopt AI tools in the near future.
Best Law Firms conducts a comprehensive survey of Canadian firms as part of its annual research and ranking process. Overall, 344 firms replied to this year’s survey, with respondents ranging in size from solo practices to large national and global firms. Together, the firms in the survey employ more than 14,800 lawyers, or roughly 11% of the active attorneys in Canada.
- Canadian law firms are cautiously exploring generative AI, with 80% of firms with over 20 lawyers piloting or researching AI tools, while only 7% have fully implemented these tools across multiple areas.
- Larger firms have better resources, driving AI usage for legal research and client pitches. However, only 20% are utilizing AI for litigation analysis.
- Ethical concerns and AI-generated inaccuracies challenge firms. For larger firms, clear ethical guidelines are more prevalent compared to smaller firms.
- Clients' push for AI adoption might outpace the law firms' readiness, with less than 10% of Canadian firms fully adopting AI, indicating an urgent need to align with technological expectations.
How They’ll Use AI
In general, larger and midsize firms—collectively, those with more than 20 lawyers—have had greater resources to invest in and test AI tools. As a result, the survey asked firms in those size categories about their levels of generative AI adoption and how they are currently using or planning to use artificial intelligence.
Nearly half, 46%, said they were currently exploring the potential for generative AI. Another 37% had gone a step further, saying they were piloting generative AI tools in select practice areas.
For those firms currently using AI or planning to do so, 63% said artificial intelligence would help them conduct legal research. And 56% said they see AI’s potential for developing marketing content and client pitches. Just under half of firms believe AI can enhance their knowledge management systems, assist in drafting contracts and other legal documents, or automate routine correspondence.
Fewer firms, however, are sold on AI’s analytical power. Only one in five are using or plan to use generative AI to help them analyze litigation risks or strategies.
Billing Questions
The survey asked all firms, including those with fewer than 20 lawyers, about the impact of generative AI on their billable hours. Given that most are still exploring how they will use AI tools, the vast majority—63%—demurred, saying that they do not use generative AI.
For the remaining 37% who are using AI to some degree, results were mixed. The largest contingent, 17%, said they have seen no changes in their billables because of AI tools. For 11%, artificial intelligence has resulted in a reduction in billable hours for certain tasks. Another 9% are seeing increased efficiency, but no change in billables.
If the experience of their neighbors south of the border is any indication, Canadian firms may soon feel more significant effects. According to Best Law Firms’ most recent U.S. survey, 40% of firms said artificial intelligence is beginning to have an impact on their billing practices.
At larger U.S. firms, where AI implementation is farther along, the effects are more pronounced. Among firms with more than 150 lawyers, 55% said AI has affected billing, either by increasing efficiency without changing billable hours or by reducing billable hours for some tasks.
AI Risks
For many firms, ethical risks pose significant obstacles to embracing AI technology.
The list of law firms sanctioned by the courts for including fake, AI-generated case citations in court documents continues to grow. And AI hallucinations could pose a significant threat to client relationships and law firm reputations.
Firms have real cause for concern. A 2024 study published in Harvard Law School’s Journal of Legal Analysis found that OpenAI’s ChatGPT and other public large language models “hallucinate at least 58% of the time, struggle to predict their own hallucinations and often uncritically accept users’ incorrect legal assumptions.”
Why Competence Is Critical
Canadian courts are still grappling with how they will handle AI-generated errors. One of the most prominent examples is Zhang v. Chen, a Supreme Court of British Columbia decision from February 2024.
In that case, a lawyer filed a notice of application that included fake case law fabricated by ChatGPT. The lawyer notified the court, acknowledged her errors and said she was unaware that ChatGPT faked such information. Opposing counsel asked for monetary compensation.
In a precedential decision, Justice David M. Masuhara sanctioned the attorney and said it “would be prudent” for the lawyer to “advise the court and the opposing parties” when court documents include AI-generated content.
“As this case has unfortunately made clear, generative AI is still no substitute for the professional expertise that the justice system requires of lawyers,” Masuhara wrote. “Competence in the selection and use of any technology tools, including those powered by AI, is critical. The integrity of the justice system requires no less.”
Ethics Policies
Given these challenges, the Best Law Firms survey asked Canadian firms what they are doing to ensure that their lawyers and staff are ethically using generative AI tools. How firms are responding varies significantly based on their size.
The largest firms, those with 100 or more lawyers, were far more likely than midsize (20-100 lawyers) or small (1-20 lawyers) firms to have established clear policies on when AI can be used in client matters. Two-thirds of large firms had such policies, compared to half of midsize and a third of small firms.
The gap narrows somewhat when it comes to training lawyers on the limitations and risks of artificial intelligence: 63% of large firms are doing so, compared to 55% of midsize and 52% of small firms.
Firms are far less likely to seek permission from clients or communicate with them about AI usage. Just 27% of large firms, 29% of midsize firms and 18% of small firms ensure that they have client consent for the use of AI in their matters. Among all firms, only 11% said they actively communicate the use of generative AI as part of their value proposition, 17% tell clients about AI if they inquire and 7% said they never disclose AI usage. (The remaining firms said they are not using AI.)
The Automation Process
Overall, Canadian law firms said they have automated a little more than one-fifth of their administrative tasks. Small firms have done somewhat more automation, 23% of tasks, than their large and midsize peers, 15% of tasks, the survey said.
Certain back-office technology tools are ubiquitous, firms reported. More than 80% of law firms said they were actively using practice management software. And roughly 60% of firms of all sizes were using e-billing platforms and document automation tools. HR management software was the next most common back-office technology, used by 39% of firms. The newest entries to the technology mix, AI-driven research platforms, are being used by 29% of the firms surveyed.
Technology adoption in Canada lags behind some locales—though not by dramatic margins, the survey found. Best Law Firms’ most recent survey of U.S. firms, for instance, found that firms had automated 32% of their administrative tasks. As in Canada, smaller U.S. firms had turned more tasks over to automation than large and midsize firms. The same was true in a recent Best Law Firms survey of France, which showed that 30% of law firm tasks had been automated.
A Push From Clients
The results of the Best Law Firms survey show that Canadian firms are taking a go-slow approach to AI adoption. But technological change is accelerating, and firms are likely to encounter a powerful force that will push them to invest in and adopt AI tools more rapidly—their clients.
In October, the Association of Corporate Counsel (ACC), in a survey of in-house legal professionals across 30 countries, found a “decisive shift from passive planning to active implementation” of AI technology by corporate legal departments. “The past year has been a pivotal one for adoption, showing a dramatic acceleration in GenAI usage,” the survey found. “Additionally, GenAI is also fundamentally altering the relationship between in-house teams and their outside counsel.”
The ACC survey notes that most in-house professionals “remain unaware,” however, “whether their law firms are using [AI] technology on their legal matters.” Most have yet to see cost savings from outside counsel and a quarter will “push for a change to the billable hour because of generative AI."
The Best Law Firms survey shows that many firms may not yet be ready for such a push. With fewer than one in 10 Canadian law firms fully adopting AI, and most still experimenting or developing their policies, they will have work to do to catch up with their clients’ expectations.
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David L. Brown is a legal affairs writer and consultant, who has served as head of editorial at ALM Media, editor-in-chief of The National Law Journal and Legal Times, and executive editor of The American Lawyer. He consults on thought leadership strategy and creates in-depth content for legal industry clients and works closely with Best Law Firms as senior content consultant.
