EU AI Act: A Framework for Innovation in Legal Departments
The EU AI Act serves as a crucial framework for legal department leaders who are increasingly exploring how generative artificial intelligence can drive efficiency and innovation within their organizations. However, the intersection of technological advancement and regulatory compliance presents unique challenges that require careful navigation.
The Regulatory Landscape
As organizations embrace innovative technologies, a pressing question arises: does regulation support or hinder progress? The complexity of achieving regulatory compliance becomes more pronounced with the introduction of AI technologies, where overlapping laws and regulations can create confusion. For instance, a company’s compliance with a data privacy law in one state may conflict with its obligations under antitrust laws or government reporting requirements.
When AI is added to the mix, these concerns intensify. AI implementation can introduce a myriad of issues across various corporate activities, compounded by emerging AI-specific laws both in the US and globally.
Compliance Guardrails
Organizations must first map the intricate web of overlapping compliance requirements before implementing the necessary policies and procedures to establish compliance guardrails. While some may perceive these challenges as barriers to innovation, they can also be viewed as opportunities to assess potential risks and provide a roadmap for responsible innovation.
For example, a recent industry report revealed that a majority of chief legal officers express caution regarding the use of generative AI within their organizations, citing the need for robust governance due to the associated risks.
Identifying Risks
In a study exploring concerns related to generative AI, respondents identified over 15 unique risk areas, with security topping the list. Other concerns included explainability, defensibility, potential for new litigation types, creation of harmful content, regulatory challenges, bias, ethics, and data privacy. Alarmingly, 85% of respondents felt minimally prepared to tackle these risks.
Innovation Guideposts
For legal leaders feeling unprepared, the EU AI Act and similar regulations can serve as guideposts for innovating while mitigating risks. The European Commission has provided foundational guidance addressing critical areas, including the definition of AI and prohibited AI practices. This guidance complements the EU AI Act’s provisions that mandate AI literacy within organizations adopting new AI technologies.
Product-Level Regulation
The EU AI Act introduces product-level regulation for AI systems deemed to pose unacceptable or high risks to individuals and society. High-risk applications are subject to stringent requirements, such as:
- Activity logging to ensure results can be traced
- Robust risk assessment and mitigation processes
- Comprehensive documentation of all activities
- High levels of cybersecurity and accuracy
These foundational elements aid organizations in incorporating best practices within their product innovation processes. Interestingly, the European Commission has indicated that most AI systems in use fall into limited, minimal, or no-risk categories, with limited-risk systems required to meet specific transparency obligations.
Aligning with Data Privacy Standards
The EU AI Act is notably aligned with the General Data Protection Regulation (GDPR), providing a framework for upholding data privacy standards in AI systems. While this alignment may complicate an organization’s data privacy strategy, it ultimately equips companies to avoid misuse of personal information and data privacy violations.
Conclusion
Generative AI presents unparalleled opportunities for the legal field, enabling enhanced efficiencies and transformative processes. However, it is imperative that these advancements align with comprehensive risk management strategies. By adopting a balanced approach, organizations can leverage compliance as a catalyst for innovation, fostering proactive and sustainable methods that work in tandem with technological design and experimentation.
