2025 OSLER LEGAL OUTLOOK

In last year’s Osler Legal Outlook, our authors shared their views on important legal developments during 2024 and provided advice and perspectives on how to navigate the years ahead in light of these developments. We predicted that the election of Donald Trump would drive significant change. We also signalled the significance of the rapid expansion of artificial intelligence (AI). Both predictions have been borne out, perhaps even more than anyone could have anticipated. At the time of writing last year, the outcome of the pending Canadian federal election was unknown. We, like others, underestimated the potential effects of a new Canadian federal government.

In assessing the pieces that our colleagues have written this year, three themes have emerged, largely shaped by the trends we identified in 2024. First, while AI has been an important topic of conversation since 2023, it has become an increasingly pervasive theme in legal, policy and business discussions in unprecedented ways. The pace of change is dizzying. This year, AI forms the core theme for a number of our articles. The second theme is the initial and continuing implications for Canada caused by significant and rapid changes in the global order. Notably, the dramatic shift in approach to trade and political relationships stemming from the U.S., and the ongoing uncertainty that persists, has required rapid adaptation in many areas affected by cross-border relations. Finally, despite upheaval in certain areas, many of our articles reflect ongoing “business as usual” legal developments occurring through statutory and regulatory changes and key judicial decisions.

As we prepare for the upcoming year, these themes will continue to resonate throughout the Canadian economy and business community. More uncertainty and rapid change are on the horizon. Businesses need to prepare appropriately for the implications for their operations and their customers and clients. While AI presents untold opportunities that can foster greater efficiencies, it raises significant concerns if its use is not properly governed and monitored. The Build Canada and Buy Canada landscape that is currently dominating the national political mindset will continue to affect legal and regulatory perspectives. Trade relations with the U.S. and other trade partners will inevitably continue to shift. Those prepared to react and respond quickly to these developments will be best placed to take advantage of the opportunities presented.

AI is a dominating force to be reckoned with

AI appeared in common parlance in dramatic fashion in 2023. Predictions of widescale replacement of many human roles and functions in the short term were clearly hyperbolic. However, as we move towards 2026, AI has become so sophisticated that many businesses are now relying on agentic AI— replacing human agents with AI tools that have the capacity to plan, reason and act independently. These tools raise significant legal considerations in areas such as intellectual property, privacy, data management, contracting, tax and others.

AI is increasingly transforming legal advocacy, including drafting and supporting legal submissions in courts across the country. While potential advantages include greater access to justice, there are significant ethical issues for courts to wrestle with. The efficiencies offered by AI can be undermined by the errors and hallucinations routinely caused by generative AI tools. Substantial implications arise for lawyers, for clients whose cases may be jeopardized, and for the accurate development of the law. Courts and regulators are introducing tools aimed at counteracting these issues.

AI also raises important questions about the ownership and use of copyrighted material as part of the training data sets for AI models. Judicial decisions in the U.S. and in Canada are beginning to grapple with the appropriate application of existing copyright laws, as well as the availability of the fair use and fair dealing doctrines to defend infringement allegations. Legislative reform may be on the horizon.

The federal government is seeking to position Canada at the forefront of the AI revolution. This will likely involve a multifaceted strategy implemented through privacy legislative reform, policy and investment. Beyond AI, a variety of new privacy and data legislative frameworks are likely forthcoming, including a new federal private sector statute. Companies doing business in Canada will need to have a thorough understanding of their personal information and data practices and implement documented governance plans.

Part of the federal AI framework will likely address data sovereignty. In the face of global growth in data, as well as heightened concerns regarding national security, cybersecurity and global uncertainty, the government is likely to respond with an approach seeking to preserve and protect Canadian data, in some measure, from foreign intervention and access. The government will have to balance the desire to protect Canadian data against the competitive costs to businesses of excluding foreign data providers.

The rapid increase in AI demand has significant practical implications for…

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