The Challenges Facing Canada’s Small and Midsize Immigration Practices in 2027-2028
Small and midsize immigration law practices in Canada are a case study for law firms everywhere about the need for resilience in response to rapidly changing market-demand and regulatory environments.
For most of the last decade, a Canadian immigration practice could grow just by keeping up with demand. Study permits, post-graduation work permits, LMIAs, spousal open work permits and Express Entry files came in steadily, and capacity was usually the main constraint. That period is over. Ottawa is now deliberately shrinking the temporary resident population, Parliament has given the government broad new powers over applications in bulk, and the Federal Court is handling an unprecedented flood of judicial review applications. For boutique firms and immigration groups inside small and midsize full-service firms, 2027–2028 is shaping up as a test of strategy, marketing, and operations—all at the same time.
Strategic challenges
The temporary-resident pipeline is shrinking.
The biggest strategic fact for 2027-2028 is that the federal government wants fewer temporary residents, and it has set numbers to prove it. The 2026–2028 Immigration Levels Plan commits to bringing the temporary population below 5% of Canada's total population by the end of 2027. It sets new temporary-resident arrivals at 385,000 in 2026 and 370,000 in each of 2027 and 2028. The plan targets 155,000 new student arrivals in 2026, which IRCC describes as 49% fewer than the previous year's target, and 230,000 new temporary worker arrivals, 37% fewer.
The real numbers are lower still. IRCC told the House of Commons immigration committee that it received only 115,470 new student arrivals in 2025, 62% below the 305,900 target. The refusal rate for new study permit applications rose to 59%, and the number of study permit holders in Canada fell 26% in a single year.
On the employer side, low-wage Labour Market Impact Assessments (LMIAs) now require at least eight consecutive weeks of advertising plus documented youth outreach, effective April 1, 2026. Business immigration has been cut back too. The Legal 500's Canada corporate immigration overview notes that the Start-Up Visa closed to new applications on January 1, 2026, and that the Self-Employed Persons Program is paused until 2027.
For a firm whose revenue depends on students, low-wage LMIAs or entrepreneur files, the problem is concentration risk, not a slow quarter. Firm leaders should know what share of fees came from each program over the last three years, and should assume the hardest-hit categories will not bounce back on their own.
Volatility is now built into the law.
Policy change has always been part of immigration practice. What is new is the scale at which the government can act. Under Bill C-12, the Strengthening Canada's Immigration System and Borders Act, which received royal assent on March 26, 2026, IRCC can cancel, suspend or change large groups of immigration documents, pause intake, or cancel or suspend processing when it considers this to be in the public interest. IRCC's own explanation says these orders require Cabinet review and an order in council, and that they cannot be used to grant or revoke status or to affect asylum claims. Even so, the Legal 500 overview warns that these powers create real planning uncertainty for clients and advisers.
In practice, a file accepted under one set of rules may be finished under another. Firms should rewrite engagement letters to deal with program closures and intake pauses, including what happens to fees, refunds and alternative strategies. They also need a fast internal process for sorting affected clients when an order in council is published.
Demand is moving, not disappearing.
The good news is that demand is moving into areas where lawyers have a natural advantage:
Litigation. Immigration filings at the Federal Court went from about 6,400 in 2020 to more than 28,000 in 2025, making up 86% of all Federal Court matters. The Court says 2026 is a fifth straight record year and may exceed 30,000 files.
Citizenship by descent. Bill C-3 came into force on December 15, 2025, and expanded citizenship by descent. One Ottawa consultant told CBC that her caseload of American clients rose tenfold, from 10 to 100 applications a month.
In-Canada transitions. Two one-time initiatives running through 2026 and 2027 sit outside the regular levels targets. One will speed up permanent residence for 33,000 workers in smaller communities and process up to 115,000 protected persons and their dependents.
Highly skilled and U.S.-based talent. Budget 2025 promised an accelerated pathway for H-1B holders. As of August 2026, however, an H-1B Express Entry category was still only a consultation question, not a confirmed program.
The strategic question for each practice is which of these flows it can serve profitably and with real expertise, and which it should leave to others. Not every firm should run a Federal Court practice. Every firm should decide on purpose, though, rather than drifting into litigation one refused client at a time.
Marketing challenges
Competing in a crowded market where trust is low
Small firms compete with licensed consultants, large national firms, offshore agents and outright fraudsters. Most of that competition happens online, where the College of Immigration and Citizenship Consultants has had to take down about 1,500 websites and social media pages advertising unauthorized practitioners in a single enforcement push. Lawyers are being impersonated as well. Alberta immigration lawyer Yameena Ansari told New Canadian Media that fraudsters stole her professional identity to solicit vulnerable clients, and that scammers now use polished websites and AI-generated marketing to imitate legitimate firms.
The regulatory landscape is also changing. New College regulations took effect July 15, 2026, strengthening discipline and penalties. Starting in April 2027, the College's public register must show more information about licensees. As consultant regulation improves, a law society license alone will set a firm apart less than it used to.
For small firms, this means verifiability has become part of marketing. Firms should make it easy for prospective clients to confirm they are dealing with the real firm: consistent branding, published law society numbers, a clear rule that the firm never asks for payment through personal messaging apps, and a "how to verify us" page. Firms should also check regularly for impersonation of their own lawyers and report it quickly.
Selling judgment when information is free
Prospective clients now arrive with AI-generated research, Reddit threads and CRS calculators. IRCC confirms that applicants and representatives increasingly use generative AI to prepare letters, forms and narratives, and that it has seen fraudulent applications generated with AI. When forms and checklists cost nothing, a firm cannot market itself as a form-filler. It has to sell judgment: strategy in a narrowing market, credibility assessment, documentary rigor, and the ability to take a refusal to court.
This calls for content marketing that explains why a file is hard, not just what the steps are. Useful formats include short write-ups of refusal patterns, explainers on when reconsideration makes sense compared with judicial review, and plain-language guidance on how a policy change affects a specific type of client. All of it must be checked against the firm's law society rules on advertising, testimonials and claims about results.
Managing expectations is now an important marketing task.
Long processing times hurt reputations, and clients often blame their representatives. Some delays are extreme. As of September 2026, CBC reported 136,000 citizenship certificate applications waiting and a 33-month wait for new applicants, compared with four to six weeks for some applicants in January 2026. Firms that set expectations clearly at intake, and repeat them throughout the file, will protect their online reviews and referral networks better than firms that let clients find out about delays on their own.
Operational challenges
Running a litigation practice inside a strained court
Litigation is growing, but it is not easy money. The Federal Court says the Registry can take up to eight weeks to process new files, that it is operating beyond capacity, and that urgent motions to stay removal are up 54% from last year. A Special Order effective June 26, 2026 extended the deadline for an Applicant's Record from 45 to 90 days. That gives practitioners more room, but it also signals that files will take longer. CBC reported that some immigration cases were taking 14 to 18 months, compared with six to eight months before the surge.
Longer timelines tie up work in progress and complicate flat-fee pricing. Firms need staged fee structures (leave, hearing, redetermination), firm deadline-management systems, and a deliberate policy on mandamus applications, which are easy to file but harder to make profitable. Lawyers also report a frustrating pattern. In one case, St. Catharines, Ontario, lawyer Andrew Koltun said a refusal was overturned on judicial review, but the redetermination copied the original reasons and repeated the error. Engagement terms should state plainly what happens if that occurs.
Rebuilding the refugee practice
Asylum practices face sharp changes in both volume and procedure. Canada received 114,515 asylum claims in 2025, but claims from January to April 2026 were 42% lower than the same period in 2025. Bill C-12 makes claims ineligible for referral to the Immigration and Refugee Board if they are made more than one year after first entry after June 24, 2020, or more than 14 days after an irregular land-border crossing. Those claimants are left with a pre-removal risk assessment instead. The Canadian Bar Association’s Immigration Law Section has warned that the proposed regulations implementing these reforms risk "delay, ambiguity, and removal of procedural safeguards."
At the same time, the Board still carried a large inventory, with 296,200 pending claims as of September 30, 2025 and an average wait of 22 months from referral. For firms that depend on legal aid certificates, this means fewer new full hearings, more PRRA work, and a long tail of older claims. Federal immigration and refugee contributions to Legal Aid Ontario rose to about $87.3 million in fiscal 2025–26 from $71.5 million. Firms should keep in mind that funding follows government priorities and can change. The one-time initiative for protected persons offers follow-on permanent residence work that refugee practices are well placed to handle.
Processing delays and the cost of client service
IRCC's total backlog fell to 922,700 applications as of April 30, 2026, the lowest since July 2025. The improvement is uneven. Express Entry's backlog fell to 9%, while the work permit backlog rose to 37% and family sponsorship outside Quebec reached its highest level since April 2023. Toronto lawyer Zeynab Ziaie Moayyed has said that informal channels for fixing officer errors have largely closed, which pushes more disputes into court.
Every month a file stays open adds unbilled time for status checks, web-form inquiries, client reassurance and document refreshes. Flat fees set in 2022 probably do not cover this. Firms should reprice using real cycle-time data, build "file maintenance" stages into longer matters, and automate status updates to clients.
Adopting AI without creating risk
AI is now an operational necessity, but it comes with professional responsibility risk. At the 2026 CBA National Immigration conference, discussion shifted from questioning the government's use of AI to which AI tools firms should adopt. The courts have also drawn clear lines. In Hussein v. Canada, 2025 FC 1060, the Court held that generative AI use must be disclosed and its output verified by a human, and imposed costs after counsel filed nonexistent authorities. In Mehrara v. Canada, 2024 FC 1554, the Court set aside a Chinook-assisted refusal because the officer did not engage with the evidence. That gives practitioners a basis for challenging specific reasoning failures, though not automation in general.
For small firms, the question is not whether to adopt AI but how to govern it. That means a written AI policy, approved tools that handle client data appropriately, required verification of citations, disclosure procedures for court filings, and a plan for redeploying staff instead of simply cutting them.
Planning for 2027-2028
Several dates should be on every firm leader's calendar. The 2027 temporary-resident targets are notional and will be confirmed or adjusted by November 1, 2027. The one-time permanent residence initiatives end in 2027. The College's expanded public register arrives in April 2027. The under-5% temporary population target falls at the end of 2027.
The law firms that will do well in 2027 and 2028 will be the ones that:
Diversify on purpose away from student and low-wage worker files and toward litigation, citizenship, in-Canada permanent residence transitions and employer compliance.
Market trust and judgment instead of transactions, and actively protect their identity online.
Reprice for longer timelines using staged and maintenance-based fees.
Scenario-plan for sudden policy shifts, with engagement terms and client-sorting procedures ready before the next order in council.
Govern AI deliberately, gaining efficiency without exposing the firm to costs awards or discipline.
Canada still needs immigrants, and immigrants still need skilled counsel. In 2026–2028, though, there will be fewer traditional immigration files, and they will be harder. At the same time, the flood of citizenship-by-descent applications is likely to continue, and, as a practical matter, most applicants will find that investing in the services of an immigration law practice will greatly improve their chances of a favorable decision and will reduce, if not eliminate, even greater delays due to inadequate supporting documentation.
Small and midsize practices that recognize these opportunities and challenges early, and change their strategy, marketing and operations to match, will be be more likely to continue to be successful in a highly competitive, rapidly evolving environment.
For more information about how Walker Clark LLC can help small and midsize law firms everywhere—not just in Canada—respond better to emerging opportunities and challenges, use the secure e-mail link at the bottom of this page to request a confidential, complimentary consultation with us.