Chief Legal Officers Leading Enterprises' Gen AI Use
A recent Deloitte global insight survey has revealed that chief legal officers (CLOs) are increasingly prioritising Gen AI over traditional legal-specific initiatives.
The survey of 460 legal executives asked about various enterprise-wide and legal function-specific topics including Gen AI indicates that 93% of CLOs believe Gen AI has the potential to deliver value to their organisations within the next year, and a staggering 95% report that their organisations have already engaged with Gen AI in some capacity.
Yet with Gen AI seeping into businesses of all capacities and all sectors, many times regardless of head-office diktats, CLOs are increasingly unsure about how they can manage its use whilst staying on the right side of legislation.
Only 35% of CLOs feel their organisations possess the necessary knowledge to oversee Gen AI efforts, and just 27% believe their businesses have the skills to effectively execute these initiatives.
The issue with Gen AI use
This pronounced shift towards Gen AI among CLOs is occurring in a global context increasingly characterised by regulatory scrutiny.
The EU's AI Act enacted in August represents a significant step in establishing legal frameworks around AI technologies.
This legislation, four years in the making, aims to regulate the development, usage, and application of AI, reflecting a growing consensus that AI needs to be tightly governed.
The AI Act introduces a risk-based regulatory framework that tailors the level of oversight to the perceived risks associated with different AI applications.
Gen AI is classified as "general-purpose" AI under this Act, which imposes strict requirements, including adherence to EU copyright law and the implementation of cybersecurity measures. This regulatory environment is forcing CLOs to focus on Gen AI and the complexities it brings while striving to harness the technology's potential.
Failure to comply can result in costly fines of up to €35m (US$ 37.7m) (or 7% of their global annual revenues, whichever is higher).
The Deloitte survey showed 99% of CLOs are either implementing or planning to implement Gen AI initiatives
Despite this optimism, the survey highlights critical gaps in understanding and execution; Alarmingly, only 15% of CLOs report that roles and responsibilities for Gen AI initiatives are clearly defined within their organisations.
A Informatica survey showed 43% of UK companies cited AI governance as a primary challenge.
Moving with regulations
The AI Act, however, has allowed for gradual implementation, with some laws not taking full effect till 2026.
This is intended to ease the burden on organisations as they adapt to the new regulatory landscape.
As organisations increasingly invest in Gen AI—75% have set aside budgets for the technology in the upcoming financial year—the need for clear regulatory guidance becomes paramount.
Companies like Unilever are proactively preparing for responsible AI use by implementing safeguards and testing potential use cases through cross-functional teams. This proactive approach aligns with the sentiments expressed by industry leaders, who recognise the necessity of a clear framework to navigate the complexities of AI development.
Yet the Deloitte survey underscores a pivotal moment for CLOs as they shift their focus towards Gen AI amidst a backdrop of increasing regulatory scrutiny.
As the landscape evolves, CLOs must bridge the gaps in understanding and execution to leverage Gen AI effectively while navigating the complexities of compliance in an increasingly regulated AI world.
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