Jessica Lipson, Genny Ngai and Tess Bonoli Discuss Risks and Best Practices for Businesses Using AI Tools in Law.com
Partner Jessica L. Lipson, co-chair of Morrison Cohen’s Technology, Data & IP Practice, Partner Genny Ngai of the White Collar & Regulatory Enforcement Practice and Associate Tess Bonoli of the Technology, Data & IP Practice co-authored an article in Law.com titled “Risks and Best Practices Relating to Businesses’ Use of AI Tools.” As companies increasingly rely on AI for critical decisions, the legal, regulatory and business risks grow. The authors outline where AI can go wrong and offer practical steps to mitigate exposure.
Key Risks of AI Use:
- Data Input – Feeding trade secrets or sensitive data (e.g., medical, financial, children’s information) into AI can compromise confidentiality and trigger laws like HIPAA, COPPA and Gramm-Leach-Bliley.
- AI-Generated Output – Risks include:
- Inaccurate/deceptive content: Companies may be held liable for misleading chatbot or content outputs (e.g., Moffatt v. Air Canada).
- Algorithmic discrimination: Bias in outputs can violate employment laws and new rules like Colorado’s AI Act, which mandates audits, mitigation policies and consumer safeguards.
- IP infringement: AI outputs may reproduce copyrighted or other third-party materials, without proper authorizations.
- Open source risks: AI-generated code/content may improperly use open-source materials, risking license violations or loss of proprietary rights.
- AI Washing: making false or exaggerated claims about AI capabilities can lead to enforcement.
How Companies Can Mitigate AI Risks:
- Choose vendors with strong security/compliance standards and protect against risks through contracts reviewed annually.
- Build cross-functional AI governance programs with clear policies, controls and training.
- Maintain response plans to address data breaches.
- Track AI use cases, audit outputs for bias/errors, and document compliance.
- Ensure user terms allocate AI risks appropriately.
For more on AI risks and mitigation measures, Law.com subscribers can access the full article here.
Contacts
- Jessica L. Lipson Partner & Co-Chair, Technology, Data & IP
- jlipson@morrisoncohen.com
- Genny Ngai Partner
- gngai@morrisoncohen.com
- Tess Bonoli Associate
- tbonoli@morrisoncohen.com
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Our Technology, Data & IP Practice helps you design long-term strategies for the protection of your intellectual property assets, maximize your technology infrastructure and comply with the myriad privacy and data security laws facing business today. Where necessary, we also develop and implement cost-efficient litigation strategies to best protect and enhance your business, now and in the future.
Our White Collar & Regulatory Enforcement Practice represents corporate entities and individuals in investigations brought by a wide array of governmental agencies, as well as exchanges and self-regulatory organizations.
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