Navigating Legal Risk in AI Adoption: Key Moments to Engage Counsel

March 10, 2026

Artificial intelligence is rapidly reshaping business operations, offering efficiencies in everything from customer service automation to supply chain optimization and contract drafting. However, the integration of AI technologies introduces a host of legal complexities. That makes proactive legal engagement critical to ensure compliance, manage risk, and safeguard business interests. Here, we identify the junctures at which businesses should seek legal counsel when deploying and operating AI systems.

Pre-Deployment Legal Review

Legal review is essential before implementing AI tools. Popular options include chatbots, predictive analytics, or generative models. Counsel can assist organizations in evaluating contractual obligations with vendors and platforms; ensuring compliance with data privacy regimes, such as GDPR, CCPA, and HIPAA; and identifying intellectual property risks, including the ownership of AI-generated content.

Handling Sensitive or Regulated Data

AI systems frequently process large volumes of data, which may include personal, financial, or health information, and in some cases, they store this information indefinitely. For example, a magistrate judge directed OpenAI to “preserve and segregate all output log data that would otherwise be deleted on a going forward basis” in response to an ongoing lawsuit brought by the New York Times against OpenAI. Legal guidance is necessary not only to establish robust data governance policies and comply with sector-specific regulations but also to mitigate risks associated with data breaches or misuse.

Training AI on Proprietary or Third-Party Content

The use of internal documents or third-party materials to train AI models raises significant legal considerations. These can include potential copyright infringement, the exposure of trade secrets, and the need for appropriate licensing agreements. In one recent example, in September Anthropic AI agreed to a $1.5 billion payout to settle a lawsuit alleging copyright infringement. Legal counsel can help structure training practices to avoid intellectual property violations and protect confidential information.

AI-Driven Decision-Making

When AI outputs inform business decisions, such as those related to lending or customer eligibility, legal review can be crucial to assess and reduce risks related to bias and discrimination, ensure fairness and transparency, and maintain compliance with civil rights and consumer protection laws.

Contract Negotiations Involving AI

When a business is acquiring, selling, or licensing AI technology, legal input helps to define liability and indemnification provisions and clarify ownership of AI-generated outputs. In addition, these efforts can establish performance standards and audit rights within contractual arrangements.

Incident Response

AI-related incidents, including faulty outputs, can open companies up to reputational harm or regulatory scrutiny and create significant legal risk. Immediate legal consultation is advised in cases of suspected algorithmic bias, data breaches, regulatory inquiries, or potential litigation.

Conclusion

The adoption of AI presents substantial opportunities alongside complex legal challenges. Early and ongoing engagement with legal counsel empowers businesses to innovate responsibly while protecting their assets and remaining compliant with evolving regulatory requirements. Organizations interested in using AI, or in expanding their use of it, should prioritize relationships with legal advisors who have both technological and legal expertise.

About the Author David Lopez-Kurtz is a partner at Croke Fairchild Duarte & Beres and a member of the firm’s Artificial Intelligence and Emerging Technology practice area.