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AI Adoption in 2024: Navigating a Surge in Corporate Litigation and Regulatory Challenges

The adoption of artificial intelligence (AI) in various corporate sectors is expected to fuel a significant increase in litigation and regulatory scrutiny in 2024. Reports from law firms Norton Rose Fulbright and Crowell & Moring highlight that AI will drive litigation across diverse areas, including cybersecurity, data privacy, antitrust, intellectual property, and employment.

Heightened Cybersecurity and Data Privacy Risks

The Norton Rose Fulbright survey, encompassing insights from over 400 in-house legal professionals, reveals that cybersecurity and data privacy remain the top concerns. Approximately 44% of in-house counsel anticipate a rise in related litigation risks in 2024, up from 40% the previous year. The increase is attributed to the challenge of managing and securing a growing volume of data, exacerbated by sophisticated AI-enhanced cyberattacks.

Employment Law: A Key Area of Dispute

Employment law emerges as another critical area of dispute, driven by the evolving role of AI in recruitment and hiring processes. Crowell & Moring notes significant lawsuits, such as iTutorGroup’s settlement with the EEOC and the ongoing class action against Workday, indicating a trend toward increased legal challenges in AI-driven employment decisions. Experts anticipate more lawsuits related to AI in screening and recruiting tools due to lagging employment laws.

Intellectual Property and Antitrust Concerns

Intellectual property law faces upheavals, with lawsuits accusing AI platforms of using copyrighted materials for training their models. A notable case heading to trial involves Thomson Reuters and AI startup Ross Intelligence. Furthermore, companies leveraging AI for pricing strategies might face antitrust violations, with regulators closely monitoring for signs of price-fixing and collusion.

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Regulatory Investigations on the Rise

The technology, energy, and consumer markets sectors are particularly vulnerable to increased regulatory investigations and proceedings. The Norton Rose Fulbright survey indicates a significant rise in regulatory involvement, with 61% of respondents involved in at least one regulatory proceeding in 2023, up from 50% in the previous year. Anticipating further increases in 2024, more than half of the tech industry’s corporate counsel expect a growth in regulatory proceedings against their organizations.

Corporate Legal Departments: Preparing for Challenges

Despite expecting a rise in litigation volume, only 29% of corporate counsel feel very prepared for the impending challenges, a decline from 43% in the previous year. Economic uncertainty and staff shortages in legal departments are contributing factors. To address this, 52% of corporate legal departments plan to hire more in-house lawyers to manage increased litigation workloads, a notable increase from 36% in the previous year.

Conclusion: Navigating the Litigation Landscape

As AI continues to permeate various business operations, companies must brace for a complex litigation landscape in 2024. Balancing the benefits of AI with the risks of increased legal and regulatory scrutiny will be crucial. Corporate legal departments must strengthen their in-house capabilities and remain vigilant to navigate the challenges effectively, ensuring compliance and minimizing exposure to potential disputes.

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