As AI technology transforms industries, its impact on the legal industry is becoming more visible. AI has the potential to streamline processes, enhance decision-making and drive innovation.

According to Thomson Reuters' 2024 Generative AI in Professional Services Report, 88% of corporate legal departments believe GenAI could be applied to their work. Gartner predicts that, by 2026, 25% of first-draft contracts in legal departments will be generated by AI.

Although AI stands to provide benefits, it also presents risks. As the technology becomes more integrated in legal operations, the need for ethics and data privacy becomes critical.

Ethics and data privacy

A 2023 survey by Thomas Reuters found that 62% of lawyers expressed concerns around AI about accuracy, confidentiality and security, among other things. These concerns underscore the need to have safeguards in place as AI systems become more widely used.

Without ethical standards in place, poorly designed AI systems could lead to data breaches, confidentiality violations or biased outcomes — all which can harm clients and ultimately a company’s reputation. To prevent these consequences, legal teams need to adhere to ethical guidelines to ensure their AI tools comply with legal standards.

Company data

When asked about the biggest fears of AI, the Thomson Reuters Future of Professionals report found 15% of respondents had concerns around data security, 15% were concerned about loss of ethics and 7% had concerns about the loss of transparency. To mitigate these risks, legal teams should adopt safeguards and prioritize security at every stage such as data encryption, anonymization and storage.

Legal and ethical standards

Given that AI technology is still new and there are many applications, the need for regulation is necessary. The Future of Professionals report also found that 93% of respondents recognized the need for regulation. However, only 25% of law firm respondents were in favor of government regulation. To ensure that their AI tools and practices align with current regulations and ethical standards, it is essential to conduct regular audits and compliance checks of AI systems.

AI adoption

To integrate AI into legal departments, leadership needs to develop a data governance policy that outlines exactly how AI will be used and how to best protect sensitive information. More than half of legal respondents in the Future of Professionals report believe that regulation around AI should be at the industry level.

For best practices in-house, properly training employees is crucial. Surprisingly, most professionals are actually in favor of it. About 90% of professionals expect basic mandatory AI training for all professionals over the next five years, according to the Future of Professionals report.

Lastly, legal and IT teams must collaborate early to create a framework for responsible AI adoption and address potential challenges and minimize risks as early as possible.

AI in law

AI offers enormous potential for legal teams. However, it must be integrated thoughtfully and responsibly. While prioritizing ethics and data privacy is essential today, corporate counsel teams must continue to evolve strategies as AI is likely to rapidly evolve.