AI’s Leaps Forward: The Legal Personhood Debate
Artificial Intelligence is no longer emerging—it’s entrenched. With the ability to make decisions, execute transactions, and generate legal content at scale and speed, AI systems are evolving faster than the legal frameworks meant to govern them. As autonomous systems increasingly resemble legal actors, we must confront an urgent question: Should AI be granted some form of legal personhood?
This isn’t science fiction. The law is already straining under the pressure of AI’s rapid integration. Across tort, contract, and corporate law, long-standing legal doctrines are being stress-tested in real time.
Legal Personhood
Legal personhood refers to the recognition of an entity as having rights and obligations under the law. This allows it to enter contracts, own property, and be held liable in court. Corporations, for example, are granted personhood despite being non-human.
AI systems aren’t legal persons, but they’re beginning to behave like them. They make decisions, execute agreements, and act independently of their creators. Yet when things go wrong, the law lacks clarity about who’s accountable.
Take smart contracts: automated agreements that self-execute when predefined conditions are met, often on a blockchain. It isn’t clear who is held liable in a smart contract between a buyer and seller that automatically releases payment when delivery is confirmed if the goods are never delivered.
This could be attributed to programmer error. But more and more, smart contracts are using AI that can adjust to new information, find better ways to get things done, or make choices based on probabilities—functions they weren’t directly programmed to perform. At that point, the system is reasoning and isn’t simply following rules.
Traditional contract law assumes human agency and intent. With autonomous AI in the mix, there may be no clear “actor” to hold responsible when deals unravel, just a machine making choices no one explicitly told it to make.
Torts Without Tortfeasors
Tort law faces similar challenges. If an AI-powered vehicle causes an accident, who breached the duty of care? Can liability be assigned to an algorithm? Does it always fall on the developer, manufacturer, or user?
These aren’t theoretical questions—they’re already being asked in courtrooms. Our tort system was built around human decision-making, not machine autonomy. We’re asking old questions of a new actor the law wasn’t designed to handle.
Corporate Analogy Breakdown
Modeling AI’s legal treatment after corporate personhood creates new problems. Corporations are managed by accountable humans, whereas AI systems often act independently, without clear oversight. This opens an accountability gap: If AI is granted personhood, could it shield its creators or users from liability?
Worse, legal personhood brings rights as well as obligations. Under Citizens United, corporations enjoy free speech protections. If extended to AI, could a system claim First Amendment rights?
Without clear guardrails, AI personhood risks conferring rights without responsibility—becoming a tool for regulatory avoidance and a digital scapegoat with no assets, no morals, and no consequences.
Patchwork Progress
The recently enacted EU AI Act establishes a regulatory framework for high-risk AI systems but stops short of addressing legal personhood. Earlier drafts floated the idea of granting AI “electronic personhood,” but it was ultimately rejected due to concerns that it could shield developers or corporations from liability. Instead, the act designates AI as a “regulated entity,” placing obligations squarely on the humans and companies behind it.
In the US, the legal landscape is even more fragmented. Existing laws—mainly tort and contract based—are increasingly ill-suited to address AI’s autonomous behavior. There isn’t a comprehensive framework for AI accountability. Whether legislatures will debate AI legal personhood in the future is anybody’s guess.
South Korea’s newly enacted AI Basic Act emphasizes transparency and risk management but sidesteps the question of liability for AI actions, leaving gaps that academics are now probing. In Singapore, where there is no specific AI legislation, scholars have debated whether existing legal frameworks can adequately address the rise of autonomous systems without granting them legal personhood.
Companies’ Next Steps
Businesses shouldn’t wait for laws to catch up. Legal and compliance teams need to act now to stay ahead of the growing legal risks tied to AI.
A good first step is to audit how AI is used across the company, especially in high-risk areas such as finance, health care, and intellectual property. Knowing where and how AI is used helps spot legal risks early and avoid surprises.
Next, companies should update their contracts to reflect how AI is involved in decision-making. Agreements must clearly spell out who’s responsible if something goes wrong and what happens if the AI makes a mistake. Without this clarity, businesses could face confusion or legal trouble during disputes.
Organizations should also develop internal oversight structures to monitor AI decision-making and ensure human accountability remains intact. Even if a system appears to operate autonomously, there must be documented mechanisms for review and intervention.
Finally, companies should adopt internal policies that treat AI as a legal agent, acknowledging that while AI systems aren’t yet recognized as legal persons, they can still cause actions with real legal consequences. Acting now demonstrates not just compliance, but strong leadership and foresight.
Lawyers and legal departments should track legislative developments closely, especially at the state and federal level. As lawmakers begin to wrestle with AI’s legal status, new bills could affect how liability, personhood, and regulatory obligations are defined.
AI’s legal evolution is coming—by statute, regulation, or case law. The profession must be ready.
A Narrow Window
As AI becomes more autonomous, existing legal frameworks will only become more inadequate. The real danger is a legal system frozen in yesterday’s logic. If courts or legislatures assign AI legal status reactively, we may be stuck with a flawed framework for decades.
We have a narrow window to shape this conversation. Granting AI personhood may never be the right answer, but ignoring the question isn’t an option either. The legal system must evolve now, before the ghost in the machine writes its own rules.
