Corporate Shift to Building In-House AI Tools Ratchets Up Risk

Corporate legal departments and law firms are drawn to developing more AI tools in-house they can control, but there’s a downside to their popularity: They are more at risk of litigation, regulatory misfires and other threats.

Wall Street giants like Citigroup and Morgan Stanley have recently warned investors that their continued development of AI tools will add information security and regulatory risks. One of the biggest corporate legal risks has been artificial intelligence generating incorrect or misleading information, a phenomenon known as a hallucination.

Case in point: Personal injury firm Morgan & Morgan, whose attorneys were sanctioned by a judge ...