In the era of unprecedented progress of Artificial Intelligence (“AI”) in various sectors, law firms have also witnessed its vast yet unbridled application. While on the one hand, the existing legal technology is being upgraded with new features, the legal profession is also being flooded with several new AI tools and applications. Owing to the ease, convenience, speed and variety offered by AI, law firms have been aiming to deliver faster results and allocate time for strategic tasks and up-scaling.
Among others, AI caters effectively to research, contract drafting, review and automates other time-consuming mundane tasks at law firms. Therefore, it is imperative to define the scope of its use and devise an effective mechanism for its optimum application without inviting any undesirable consequences under the applicable laws.
Application of AI in law firms
AI offers a vast array of services to support law firms which may range from generating responses through commonplace platforms such as Chat GPT to specialized and dedicated applications for generating quick and exhaustive contracts, systematic redlining, e-discovery, document automation, litigation support etc. Basis the nature of application, intended use and level of development, several integral aspects such as the amount of automation, magnitude of data input required, and turnaround time may vary on a case-to-case basis. That said, law firms may choose to allow employees to utilize AI tools which are commonly available in the market or develop/adopt customized applications to meet their requirements.
- Unreliable: AI may not factor in up-to-date legal developments and factual matrix while providing advice or drafting a contract. Moreover, businesses and clients seek legal advice on intricate legal matters which may be jurisdiction-specific. AI may not be able to understand the nuances of the surrounding facts and circumstances of each case and the laws prevailing in different jurisdictions. Although AI might serve to be an effective initial research tool, it is imperative to meticulously verify and tailor its output basis the extant laws and client’s requirements.
- Intellectual Property: The provisions of the Indian Copyright Act, 1957 do not recognize AI as the author and thereby do not confer any rights associated with ownership upon AI, at present. However, as AI tools are trained to generate output basis the available literature, it is essential to be mindful of any potential infringement of existing intellectual property rights by AI tools. Therefore, it is crucial to not directly quote output generated by AI without any value additions.
- Confidentiality and data privacy: India recognizes and observes attorney-client privilege and does not permit disclosure except with the express consent of the client. While utilizing AI for providing legal services, the client’s information may be unwittingly and inadvertently exposed to the threat of unauthorized disclosure and breach. Further, the data that is shared with AI may be saved and used for improvement of their tools which endangers the privacy and confidentiality of the information shared by the clients.
- Liability: It is also essential to consider the attachment of liability and accountability in the event that AI generates erroneous, redundant, misleading or infringing work. Although there is no specific and concrete determination of fixation of liability in respect to AI, risks may be allocated and determined by way of incorporating adequate representations and warranties and indemnity clauses in the vendor contracts that provide AI services to the law firms. Such precautionary measures would protect law firms from third party claims and risks of litigations arising in relation to AI’s output. Moreover, If AI tools have been purchased “off the shelf” by law firms, legal recourse may be pursued under product liability laws in India.
Safeguards & Way Forward
- Formulation of AI Policy: It is essential to develop a comprehensive AI policy outlining the extent and manner of usage of AI, data privacy, confidentiality, safeguards and reporting mechanism. Further, the AI policy should be updated from time-to-time on the basis of dynamic changes and advancements in technology. If a dedicated and customized AI tool is being used by the firm, it is imperative to clearly include liability and responsibility of the vendor in providing and maintenance of AI services.
- Developing AI Literacy: The consultants and employees working at the law firms must be trained to understand the benefits, and methods of using AI and the risks associated with it. Moreover, they must be taught the techniques of responsibly and ethically harnessing AI effectively without endangering the confidentiality and privacy of their clients.
- Adopting effective safeguards: The firms must also implement reasonable security practices on a best effort basis to reduce any lapses in data to be used. As a good practice and a measure of risk mitigation, it is better for a law firm to inform the client of its AI policy and seek consent from the client with respect to the necessary disclosure to the extent required while providing legal services. Moreover, after enforcement of the Digital Personal Data Protection Act, 2023, law firms would also have to implement a robust system of statutorily prescribed safeguards and requirements in respect to processing of any digital personal data of its clients.
Although certain inter-connected aspects such as data privacy and confidentiality are legally protected in India, there is no binding law at the time of writing this article which specifically and comprehensively deals with AI in law firms in India. Further, as India is still in the nascent stages of embracing AI, there is no dedicated regulatory body akin to SEBI that can recommend, formulate and monitor appropriate laws and policies. Especially in light of such a legal vacuum, law firms need to be proactive and adopt a consistent approach to evolving frameworks and guidelines to adequately address advancements in technology from time to time.
 Section 126 of the Indian Evidence Act, 1872;
 Section 2 (x) of the Digital Personal Data Protection Act, 2023.
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