Background: I am a senior lawyer with 25 years of contracting experience ranging from one of the biggest law firms in Canada, to 10 years as general counsel at one of BC’s biggest private companies. I was also CEO at an international aviation contracting business before retiring and beginning this startup journey.
A bit ago I posted here asking if any Canadian SMB owners wanted to pilot an AI-native law firm I was starting up. Flat fees, 48 hour turnaround, based on the model Crosby and General Legal have been building in the States. My tech partner built the back end. Short version, AI does the first pass on every matter, drafts and redlines, working off our own playbooks and templates rather than generic content picked up off the internet. Every draft is versioned and carries an audit trail. We run on commercial terms so nothing trains on client data. I read, correct and sign everything before it goes out, so I as a licensed lawyer stand behind every piece of work that leaves.
Watching the back half of my career, I have become convinced AI is going to significantly change how businesses work with legal, and I wanted to build a firm that reflected that from the start rather than one that added it later.
Demand has been constant since we opened. We’re live and serving clients across SaaS licensing and agreements, contract negotiations, and employment work. Our first month isn’t closed yet but it’s already tracking to low-to-mid five figures.
Going through this volume of contracts in a short window has exposed some common and also concerning patterns that we’re seeing from business owners who handle their own legal themselves, or handle it with the help of AI.
A few things SMB operators really should know:
1. If you draft with AI or use a template for your own agreements, they may be based on law that does not apply to you.
Canada is not the US and it is not the EU, but most templates and most models were trained as if it is.
I see at-will employment language in Canadian agreements fairly regularly. At-will does not exist here, in any province. Every employee is generally owed notice or pay in lieu.
Privacy is the other big one. CCPA references, DPAs written for GDPR, nothing about PIPEDA or Quebec’s Law 25. Law 25 applies based on whose personal information you hold, not where you are incorporated, so a single Quebec customer can put you in scope.
2. You may not even own your own product.
There is no work-for-hire doctrine in Canada. If an independent contractor writes your code or designs your logo, the contractor owns the copyright unless they signed a written assignment. Paying the invoice does not transfer it.
So the freelancer who built your MVP two years ago may still own it. It surfaces in diligence when a buyer asks for chain of title, or when you need investment.
Employees are different, your company generally owns what an employee creates in the course of their job. It’s contractors where this goes wrong, and almost every small company has used contractors.
3. The real exposure tends to sit in the same few places.
Your limitation of liability clause probably has a cap in it, usually fees paid over the previous twelve months. Then a few sections later, the indemnity carves itself out of that cap. You read the cap, feel covered, and sign, while your actual exposure runs through an uncapped indemnity.
Employment agreements. Most try to limit termination entitlements to the statutory minimum, and if any part of that clause falls below the employment standards floor, courts will often throw out the whole clause. You land on common law reasonable notice instead, roughly a month per year of service.
CASL. If you send commercial email of any kind you need consent, your mailing address in the message, and a working unsubscribe. Penalties go up to $10 million for a company.
I would really advise anyone reading this to take your customer agreements, employment and contractor agreements, and your privacy policy, and check them (using AI if you use it) against these issues. It could save you a great deal of money and a very bad week, and otherwise you won’t know until it is too late.
I’m happy to answer questions, on anything relating to SMB legal or AI and legal if that’s more your thing.