Artificial Intelligence (AI), and specifically generative AI (GAI), has seen increased interest recently due to its wide-ranging potential for enterprise transformation. From content creation and task automation to personalizing experiences for consumers, AI has been making inroads into virtually every industry. While such advances hold out the promise of significant operational refinements, they also bring with them a gamut of associated legal risks. This necessitates meticulous scrutiny during contract negotiations and drafting, especially agreements involving third party vendors and any direct procurement, use, or licensing of AI by an organization. This information is gleaned from a recent analysis by the legal firm King & Spalding.
Given these complexities, it’s imperative for legal professionals to understand the best practices when entering into contracts involving AI technologies. Here are the top five best practices:
- Understand the AI technology: Legal professionals should have a solid grasp of the AI technology they’re dealing with, from the underlying algorithms to the data used for training and the potential impacts on business processes and operations.
- Assess potential risks: Identifying the potential risks concerning the use of the AI technology is paramount, including compliance risks, liability concerns, and unforeseen costs related to the use, misuse, or failure of the technology.
- Craft legal protections: The drafting of the contract should take into account all these elements, featuring clear, unambiguous language, comprehensive protections covering all risk scenarios, and contingency plans for technological failures or disruptions.
- Ensure compliance with laws and regulations: The contract should make explicit undertakings concerning compliance with the existing and evolving regulatory landscape, such as data protection laws, anti-discrimination statutes, and intellectual property rights.
- Plan for technological changes: The contract should be flexible enough to account for future technological advancements or changes in the application of the AI technology, while safeguarding the interests of the organization.
Ultimately, the specifics of each contract and the application of these best practices will depend on the precise nature of the AI technology and its interaction with the organization’s existing structures and functions.