A new report by Bloomberg Law is taking a look at legal departments' liability when it comes to AI use.

"Questions about corporate governance of AI have moved quickly from the hypothetical to the 'how,'" author Isabel Gottlieb writes. "Companies are seeking to determine appropriate standards and guardrails for using the technology responsibly, and also who should direct those governance efforts."

To solve for some of these issues, the report recommends complying with AI laws, enact internal standards within the company's workflow to stay ahead of laws, and vetting all AI tools and vendors before implementing them in the workplace.

“You need to figure out where, maybe, there are things to block,” said Sabastian Niles, chief legal officer at Salesforce, formerly at Wachtell Lipton. Furthermore, teams should be asking "where and how can that CLO facilitate the understanding of: What should we be enabling? What should we be doing?”

Gottlieb also recommends legal departments protect themselves with contracts when implementing AI systems—shifting the liability from themselves back onto AI developers.

As Daren Orzechowski, a partner at A&O Shearman, adds, "I think we’re in a window of maybe two-to-three years where there’s going to be a lot of churn within these deals—where, frankly, the terms that people are advocating for are all over the place,” he said. Orzechowski continued that AI contracts can take cues from blockchain and cloud computing contracts of recent years. “We can’t always wait and see,” Orzechowski said. “We have to figure out how to allocate the risk now.”

AI & E-Discovery

In addition to questions about liability, reporter Thomas Barce notes that "generative AI’s entrance into enterprise environments has created a new dimension of company information and potential liability that many organizations aren’t quite sure how to handle. Information governance controls are now required for an uncharted category of records—namely 'interactions,' which are logs of prompts used to query AI tools. New discovery rules and processes must be established for data categories that haven’t been discoverable, including interactions and company documents created entirely by a machine. Legal teams must now address governance and compliance, as well as e-discovery readiness, when implementing generative AI. They also must proactively map out policies for how employees may interact with these tools and where the underlying interactions are stored. This way, they can be properly retained, monitored for compliance purposes, defensibly disposed, and preserved as needed for future legal discovery requirements."

Verdict

It's clear that we are still at the beginning of the AI revolution. Moreover, that the inflated promise of AI is just that—inflated. But as the reality of this new technology sets in (and litigation and liability follow suit), it's important for legal departments to implement strategy now.