Artificial intelligence is evolving and exposing companies to new areas of liability and regulatory minefields, which means it's high time for general counsel to get comfortable with AI if they want to avoid costly compliance missteps.

That's the takeaway from a report that Lex Mundi released on Thursday. The report is based on a workshop discussion that Lex Mundi, a Houston-based global network of independent law firms, hosted earlier this year in Amsterdam. 

The conference, which brought together in-house leaders, lawyers and government officials from throughout the world, focused on how general counsel from a broad array of industries are grappling with the ramifications of AI, including its effects on geopolitics and cross-border regulations. 

Alexander Birnstiel, a Brussels-based partner at Noerr who contributed to the report, noted that "companies and their in-house legal teams must navigate an environment characterized by a patchwork of new competition enforcement initiatives and regulatory rules across jurisdictions whenever they engage in digital business."

In-house leaders for global companies are going to have to be adept at navigating what the report describes as a complex "global web of regulatory activism" and "cross-border battlegrounds," the most notable of which at the moment is the 5G arms race.     

"AI is changing the power balance and fueling the rise of new social-ideological blocks with the U.S. and China leading the way," the report states. "Companies will inevitably be caught in the enforcement crossfire as legal institutions evolve to accommodate this new technological reality." 

Being prepared is the best way to dodge the crossfire, according to John Smith, a partner at Morrison Foerster and former director of the Treasury Department's Office of Foreign Assets Control. Part of being prepared, he said in the report, means spending money on information technology resources and hiring top-notch compliance and legal teams.

Several of the conference participants also suggested that corporate boards include cyber experts, who can serve as a "valuable ally to a general counsel."

Government agencies, including the Securities and Exchange Commission and the Australian Securities and Investment Commission, are already using AI to detect misconduct. At the same time, general counsel should be pushing companies to leverage the technology to identify potential regulatory issues before they become serious problems.

The report predicts that "analog-era compliance indicia such as leadership commitment, a rigorous code, training and other measures will become mere table stakes. Similar to financial services today, more companies will need AI systems and capabilities to self-monitor compliance."

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