Law Firm Industry Statistics & Trends in Canada – Updated 2025

The legal industry in Canada comprises approximately 34,012 businesses with a projected revenue of $18.5 billion in 2024.

Law plays an immense role ultimately affecting all aspects of our lives. Whether it be a commercial, civil, family, criminal, etc. matter – the legal industry significantly contributes to the maintenance of societal demands and individual rights and freedoms.

The legal field is rapidly evolving to maintain a parallelism with market conditions that continue to expand into different sectors, such as new technology law due to the emergence of generative AI. Tracking trends is essential for professionals so they can incorporate innovative strategies to grow throughout market and societal shifts.

Market Size and Growth

Overall Market Valuation:

For 2024, the legal industry is projected to have a revenue of approximately $18.5 billion.

Growth Rate:

The Compound Annual Growth Rate (CAGR) for the legal industry has grown at a rate of 0.7% between 2019 and 2024. Between 2024 and 2030 the legal industry is forecasted to grow at a CAGR of 5.1%.

As of 2023 the Canadian legal sector contributes 2.0% to the global legal services market. However, Canada is expected to experience rapid growth in the North American regional market with a projected USD 28.1 billion by 2030.

Factors Contributing to Growth:

• A change in economic conditions such as the strong growth in the real estate market has led to an increased demand of law firms specializing in real estate law
• The evolution of generative AI has allowed law firms to streamline their work ultimately leading to an increased demand in both corporate and individual clients. 26% of law firms have already incorporated generative AI into their firms with an additional 12% strategizing plans to integrate AI within the next year.
• The increase in complexity of legal matters has also led to an increase in demand of specified legal services.

Industry Segmentation by Area of Law

Corporate and Commercial Law

• Corporate and commercial law is one of the fastest growing segments in law, with an accounted global revenue of over 31%.
• As business are becoming increasingly more reliant on the services provided by corporate lawyers, the corporate segment is forecasted to see continuing growth

Real Estate Law

• The demand for real estate lawyers fluctuates with the rise and fall of the real estate market
• The real estate market is expected to see a CAGR growth of 2.1% and subsequently the legal sector for real estate will also see a rise.

Family Law

• Family law is one of the smaller segments in law.

Litigation

• Litigation law is the largest revenue generating segment in law, with increasing demand and a revenue share of 29.29%.

Intellectual Property Law

• Intellectual property law is a growing segment of law, as the increase reliance and use of technology has increased demand for legal services in this field.

Immigration Law

• Demand for legal services pertaining to immigration is reliant on the immigration services market. As the immigration services market is predicted to have a CAGR growth of 5%, immigration legal services will also likely experience growth in the next few years.

Law Firm Size and Structure

Distribution of Law Firms by Size Based on a Survey of 330 Lawyers.

• 90 lawyers are solo practitioners
• 116 lawyers are part of a small firm which is comprised of 2-10 lawyers
• 84 lawyers are part of a medium firm which is comprised of 11-179 lawyers
• 40 lawyers are part of a large firm which is comprised of 180+ lawyers

Trends in Mergers and Acquisitions in Law Firms:

• Overall there is an increase in merger and acquisition activity as law firms are expanding both domestically and internationally
• Osler has been ranked as the #1 mergers and acquisitions law firm in Canada
  • They advised on 84 transactions with an approximate value of US$ 34.2 billion.
• Skylaw is a major corporate law boutique that has a core focus on mergers and acquisitions internationally. They are involved with acquisitions in the USA, the Middle East, Australia, China, and Europe.

Rise of Boutique Law Firms Specializing in Niche Areas:

• Many more boutique firms are arising due to the increase in younger generations value of autonomy, flexibility and their own aspirations as lawyers
• Client demand for higher expertise has risen consequently rising the need for law firms focused on niche areas
• Boutique law firms can provide more valuable service to their clients
• The increased incorporation of generative AI in the legal industry has allowed for more streamlined workflow and billing practices so a smaller law firm focus on primarily on specific areas of practice
• Client demand for higher expertise has risen consequently rising the need for law firms focused on niche areas
• Boutique law firms can provide more valuable service to their clients
• The increased incorporation of generative AI in the legal industry has allowed for more streamlined workflow and billing practices so a smaller law firm focus on primarily on specific areas of practice

Employment and Workforce Statistics

Number of Practicing Lawyers:

• There are approximately over 136 000 lawyers in all of Canada.
• The top 4 provinces with the most lawyers are as follows:

1. 1. Ontario has over 57 000 lawyers.
   2. Quebec has approximately 27,463 lawyers and 4277 notaries.
   3. Alberta has 16.531 lawyers.
   4. British Columbia has 15,383 lawyers.

Employment Growth Rate:

Current Legal Hiring Trends:

• 58% of legal managers are hiring for new staff for permanent roles
• 35% of legal managers are filling permanent roles that have been vacated
• 87% of legal managers are struggling to find skilled legal talent

Specific Talents/Skill Set That Legal Hiring Teams Are Looking For:

• Legal managers are looking to increase their contract talent by 65% in the second half of 2024
• Law firms are interested in employees that can contribute to the growth of the company
  • This may look like diverse client acquisition strategies as well as specialization and expansion of practice areas 

Workforce Demographics:

2023 Demographic on Legal Workforce in Ontario:

• The average age of lawyers is 48
• 47% of lawyers are women
• 52% of lawyers are men
• 1% of lawyers are non-binary
• The average age of paralegals is 42
• 68% of paralegals are women
• 31% of paralegals are men
• 1% of paralegals are non-binary

2023 Demographic on Legal Workforce in British Columbia:

• 434 lawyers (3.0% of lawyers) are Indigenous, Aboriginal, First Nations, Metis or Inuit
• 2992 lawyers (20.5% of lawyers) are comprised of radicalized/persons of colour
• 702 lawyers (4.8% of lawyers) are LGBTQ+
• 486 lawyers (3.3% of lawyers) are individuals with a disability
• 7058 lawyers (48.4% of lawyers) do not identify with characteristics
• 2909 lawyers (20.0% of lawyers) choose not to answer

Associates vs Partners:

What is a Partnership at a Law Firm?

Being a partner with a law firm means that a lawyer has generally bought into a firm. By having partial ownership of the firm, the partner will receive revenue. Partners will also be responsible for running the firm as well as their other duties of being lawyers. Generally, partners are senior lawyers that have been working for the firm for a number of years.

What is an Associate at a Law Firm?

A new lawyer is an associate. Notably, an associate will report to a partner at the firm who in turn assigns them with cases as well as provides them with feedback.

A Shift in Dynamics:

A recent study indicates that there is an ever growing divide between ‘senior’ lawyers and ‘junior’ lawyers. Younger lawyers have indicated a shift to focus on work-life balance with only 39% indicating a strong interest in becoming partners. Younger generation lawyers are looking for flexible working environments that include remote working as 50% of junior lawyers indicated that they are more efficient when working remotely. This indicates that firms need to become increasingly flexible so as to accommodate shifting dynamics.

Revenue and Profitability

Average Revenue and Profit per Lawyer:

• The average revenue per lawyer for solo practitioners providing billable legal services is $150,000 per year.
• The average revenue per lawyer for small law firms providing billable legal services is $210,000 per year.
• The average revenue per lawyer for medium and large firms will be dependent on various factors, Osler for example had a revenue of $1.3-million.

Breakdown of Major Revenue Streams:

• Majority of law firms claim that most of their revenue is generated on the billable hour basis, with only 8% of firms claiming that 30% or more of their revenue is generated from non-hourly fees.
• Fixed-fee billing allows for more transparency between clients and the firm as well as making revenue more predictable; it also generally ensures a timely payment by the client as they are already expecting it. 60% of solo practitioners use this method of billing.
• Most law firms generate their revenue from day-to-day legal tasks and services, however they can increase their revenue by providing additional services such as:
  • Paid legal consultations.
  • Legal writing, such as drafting contracts.
  • Reviewing legal documents, such as agreements between individuals and businesses.
• Additional sources of revenue can include the interest on mixed trust accounts and subletting office spaces.

Trends in Profitably and Factors Impacting Financial Performance:

• Lawyers using a Billable Hour Index are struggling to keep up with inflation and rising interest rates.
• Many firms are implementing automation to assist with administrative tasks that are not billable. By doing this lawyers have more time available to focus on billable work.
• 77% of lawyers have indicated that they prefer to use an hourly billing model.
• Customer demand has started to lean towards more flexible billing arrangements such as flat fees, subscription service, etc. and legal professionals are shifting to meet this demand.

Revenue and Profitability

Average Revenue and Profit per Lawyer:

• The average revenue per lawyer for solo practitioners providing billable legal services is $150,000 per year.
• The average revenue per lawyer for small law firms providing billable legal services is $210,000 per year.
• The average revenue per lawyer for medium and large firms will be dependent on various factors, Osler for example had a revenue of $1.3-million.

Breakdown of Major Revenue Streams:

• Majority of law firms claim that most of their revenue is generated on the billable hour basis, with only 8% of firms claiming that 30% or more of their revenue is generated from non-hourly fees.
• Fixed-fee billing allows for more transparency between clients and the firm as well as making revenue more predictable; it also generally ensures a timely payment by the client as they are already expecting it. 60% of solo practitioners use this method of billing.
• Most law firms generate their revenue from day-to-day legal tasks and services, however they can increase their revenue by providing additional services such as:
  • Paid legal consultations.
  • Legal writing, such as drafting contracts.
  • Reviewing legal documents, such as agreements between individuals and businesses.
• Additional sources of revenue can include the interest on mixed trust accounts and subletting office spaces.

Trends in Profitably and Factors Impacting Financial Performance:

• Lawyers using a Billable Hour Index are struggling to keep up with inflation and rising interest rates.
• Many firms are implementing automation to assist with administrative tasks that are not billable. By doing this lawyers have more time available to focus on billable work.
• 77% of lawyers have indicated that they prefer to use an hourly billing model.
• Customer demand has started to lean towards more flexible billing arrangements such as flat fees, subscription service, etc. and legal professionals are shifting to meet this demand.

Billing Models and Fee Structures

Common Billing Models:

Hourly Rates:

• This is the most common billing model
• This billing model charges based on the amount of time that a lawyer has worked on a client’s file
  • Work on a client’s file can take the form of researching, preparing and building the case, corresponding with any third parties (such as the court or opposing party) as well as communicating with the client. It will also include any court appearances.
• The hourly fee is often dependent on the lawyers experience and skills

Fixed-Fee Structures:

• This billing model allows for a fixed legal fee to be charged and often the amount will be discussed before the commencement of any legal services
• Generally, there will be a fee arrangement for every legal matter – for example:
  • A flat fee will be charged for preparing a will
  • A flat fee will be charged for closing a real estate related deal
• Lawyers will usually have an idea for how much time they are going to spend on the client’s matter

Contingency Fees:

• This type of billing model will only allow a payment in the case that the client’s matter has been decided with finality or if the parties have reached a settlement
• Prior to the commencement of legal services, the lawyer and client will determine a fixed amount or fixed percentage that the lawyer will get only if they get a successful outcome for the client
• Additionally, the lawyer and client may also agree on recovering other costs and disbursements from the settlement
  • Notably, it may be decided that these costs and disbursements must be recovered regardless of the outcome of the case

Shifts Towards Alternative Fee Structures

Many clients are demanding for increased transparency and certainty of legal costs, that the most common billing structure, the hourly rate, cannot provide. Along with client pressure, many firms have stated that they are spending too much time on administrative tasks such as billing as opposed to actual legal work. The incorporation of legal technology, such as generative AI, to assist with administrative tasks is predicted to decrease costs and increase the time that lawyers have to work on providing legal services. Additionally, with the implementation of legal technology client’s can expect to see a reduction in legal service fees as well as increased predictability due to the use of alternative fee arrangements.

Impact of Technology and Legal Tech

With the development of new legal technology law firms are reducing the time they spend on administrative and repetitive tasks allowing them to focus more deeply on more important legal issues. The implementation of legal technology is predicted to reduce the time spent on mundane tasks subsequently also reducing expected costs for the client.

Document Automation and Management:

• On average about 20% of a law firms working hours are spent on routine drafting.
  • Document automation will save time requiring a legal professional to only input data once and then applying that information to a variety of documents
  • Having templates set up that document automation softwares can use will allow for even more efficiency
• Document automation will also reduce errors, such as the misspelling of a clients name, that legal professionals handling multiple tasks might make
• Document management softwares can allow centralized access to templates generated by experienced lawyers in the firm so that time is not wasted on delegating and supervising

Artificial Intelligence for Research and Analysis:

• 53% of lawyers have stated that they expect their law firms to implement artificial intelligence tools such as ChatGPT.
• Artificial intelligence tools are expected to be used to conduct legal research, drafting of documents, analysis of documents and email writing.
• The limits of AI must also be noted.
  • Softwares such as ChatGPT have been found to cite cases that do not exist. Therefore it is imperative that such tools be used with caution and all facts are double checked for accuracy.
  • There are also cybersecurity risks associated with inputting sensitive client data into AI softwares without the proper cautions and controls in place
• 45% of law firms have implemented generative AI to conduct legal work in their firms.
• 47% of law firms expect a reduction in costs due to the implementation of generative AI.
• 47% of law firms are expanding their firms business due to the use of generative AI.

Client Management and Communication Platforms:

• The implementation of legal technology softwares that create portals that clients can access has allowed for seamless communication between lawyers and clients.
  • These platforms provide instant access to case files and documents as well as any status updates so that clients remain informed through the whole process.
• The use of communication technology has increased transparency between clients and lawyers as well as increased accessibility for clients
  • The use of mobile apps and notifications provides advantages to clients so that they can remain in touch with their lawyers and receive updates wherever they are.

Remote Work and Hybrid Models

Law Firms Offering Remote or Hybrid Work Options:

• Currently an estimated 42% of lawyers are work in a hybrid environment of remote and in-office work.
• An estimated 38% of lawyers are working in-office only.
• An estimated 20% of lawyers are working remotely only.
• Prior to the COVID-19 pandemic only an average of 21% of legal staff were able to work remotely. However, since the pandemic many legal professionals have learned that they are able to work remotely, resulting in a low desire to return to full time in-office work

Effects of Remote and Hybrid Work:

• Remote and hybrid work has had many benefits:
  • Legal professionals are able to maintain a better work-life balance
  • Legal professionals use their time more efficiently and consequently productivity is higher
  • Burnout rates among legal professionals has decreased significantly
• Some challenges that remote and hybrid work has posed:
  • There is difficulty in coordinating with team members
  • Online meetings may give the impression of being informal to clients and coworkers
  • Less opportunity for articling students and new lawyers to get involved and show their interest by offering to take on additional files as well as ask for guidance

Future Trends in Flexible Work Environments:

• 87% of large firms and 70% of medium sized law firms have stated that they planning on implementing strategies for staff to return to the office.
• 58% of small firms have not developed strategies to return to the office.
• While remote work is predicted to remain an option for legal professionals, many will likely return some form of in-office work – whether it be hybrid or full time is reliant on the individual firms

Client Demand and Expectations

Client demand and expectations of legal services has taken many forms and law firms have implemented innovative strategies to meet the ever changing demand.

• Cost: Clients are increasingly demanding alternative fee structures, as well as more cost effective service. This demand has led to the incorporation of legal technology and generative AI to take on tasks to aid in reducing cost while increasing efficiency.
• Transparency: Clients are demanding transparency in legal costs as well as transparency in status updates for their cases. Many firms are adopting alternative fee structures that offer more predictability and transparency of costs. Additionally, firms are beginning to use legal technology such as communication softwares to keep clients updated throughout their legal journey.
• Alternative Dispute Resolution (ADR): Clients are increasingly demanding ADR such as arbitration and mediation in place of more traditional dispute resolution methods. The number of lawyers involved with ADR has increased by between 10% and 25% from 2020 to 2022, with arbitration lawyers increasing by 25% to 49%. With increased pressure to use ADR law firms have been adapting their skill set to comply with the demand.

Regulatory Changes and Their Impact

With the anticipation of Bill C-27 becoming law, law firms can expect a change in privacy law. The Consumer Privacy Protection Act (CPPA) will allow consumers to bring a legal action in privacy against a company that has violated an area protected by this Act. Not only will the commencement of this Bill impact the type of cases on protection of privacy coming through but it may also impact the use of artificial intelligence. The Artificial Intelligence and Data Act will ensure that AI is being used responsibly and that individuals are protected from any potential misuses of AI. This may have an impact on law firms implementing generative AI and the type of client data that they are able to input into AI.

The legal industry is expected to undergo development in many sectors so as to integrate new technology, comply with new and reformed laws, and increase the growth of individual firms. With regulatory changes and updates certain legal services are expected to become in more demand. For example, with the implementation of Bill C-27, lawyers specializing in protection and privacy may expect to see increased demand for services.

It is important for legal professionals to remain informed about regulatory changes so that they can implement and adapt to compliance requirements. Using legal technology will allow law firms to efficiently implement compliance requirements. Regular training for all legal professionals and staff members may also aid in making everyone aware of any changes and ensure that everyone is implementing the best practice strategies.

Future Trends and Industry Outlook

Expected Legal Industry Changes:

Over the next 5-10 years the legal industry is expected to increase the use of legal technology and generative AI. With the use of new technology, clients can expect a decrease in costs and an increase in efficiency.

Furthermore, the working environment is expected to shift, whether it is remote, in-office or a blend of the two, a shift is expected. With the increasing pressure to use alternative fee structures, the billable hours rate is expected to be used less and less. With Canada being a very diverse country, the legal industry is expected to represent minorities even more within the next 5-10 years. Law firms are taking on initiatives to increase diversity within their firms and to ensure equal representation and inclusion.

Conclusion

85% of lawyers feel that their firms have been successful and that number is expected to continue to grow. Despite pressures and a change in demands of both employees and clients, the legal industry has been seen to adapt and implement innovative strategies to ensure growth. The future of the legal industry is expected to become more inclusive with a better focus on client requests due to the effective implementation of legal technology. Legal technology and generative AI is expected to enhance the legal industry so that clients receive better service and that lawyers are not overworked. As times change the legal industry too is evolving.