The Productivity Paradox: Does more technology mean less
growth?
Is there scope to use AI in commercial contracts? Will it save
time, or ultimately cost more time in review and pose greater
risk?
Based on current AI models, the conceptual difference is
marginal between using a template from an online precedent library
and asking a junior associate to insert some of the basic
information for review by a partner vs letting AI do that work.
Both require senior legal review.
Is technology making due diligence easier or harder? Is the
volume of available data overwhelming or useful?
- Technology can make due diligence easier in terms of
cataloguing documents in a coherent manner at speed. - AI tools can find key words in large volumes of data.
- AI does not, however, bypass the need for human intervention to
assess relevance. It can only help point you in the direction of
where to focus your efforts
What are your three top new legal risks that technology
presents to businesses?
- Exposure to legal claims for failure to comply with
ever-changing international regulations in the areas of data
privacy and cyber security. - Claims from individuals and businesses arising from decisions
made on the basis of flawed AI models implemented with insufficient
human oversight. - Insufficient transparency in AI model development.
Modern Arguments: Dispute resolution in a mobile and
connected world
How should parties seek and agree a seat for ADR, and what
advantages does your jurisdiction offer?
For cross-border disputes, we would recommend arbitration over
the courts due to the ability to enforce arbitration awards in most
jurisdictions under the terms of the New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards.
For complex international disputes, we would typically steer our
clients towards either the London Court of International
Arbitration (LCIA) or the Singapore International Arbitration
Centre (SIAC).
Each of these organisations is (a) internationally respected for
their neutrality and impartiality in resolving disputes, and (b)
have a reputation for using high-quality commercial arbitrators,
experienced in determining international business disputes.
Have you seen or do you expect to see a rise in the use
of AI to discover infringements and actionable
matters?
Greater use of AI algorithms has already started to materialise
in this space and is likely to increase, since AI tools are better
placed than human beings to sift through large quantities of data
to detect potential infringements in real time.
What questions does AI pose for liability – who is
accountable for the actions of AI and has your jurisdiction
prepared for the question?
Developers and programmers each have the responsibility to test
their systems at every stage to avoid and/ or address errors or
harmful outcomes. Developers have a further responsibility to
ensure that the use of their AI tools is subject to clear user
agreements which limit their use to stated purposes.
Users and operators have a responsibility to test any AI
technology they deploy to check for errors and algorithmic
bias.
Jurisdictions including the UK now have regulations in place to
ensure that no decision which affect a person should ever made by
AI alone without human checks and balances being in place.
The UK government has established bodies like the Office for
Artificial Intelligence and the Department for Digital, Culture,
Media & Sport (DCMS) to oversee AI development and its societal
impact, as well as the AI Council, an independent expert committee
formed to advise the government on AI and help shape policy.
What are your three top tips for anticipating and
reducing AI-related liabilities?
- Conduct a comprehensive risk assessment to identify potential
liabilities and risks associated with
the relevant AI system, taking into account potential legal,
ethical, and regulatory implications. - Ensure that the decision-making process of the AI system is
transparent and explainable,
including how it operates, what data it uses, and how it reaches
its conclusions. Focus on these areas
should make it easier to identify and mitigate against
unintentional bias in the model going forward. - Keep abreast of legal requirements related to data privacy,
security and discrimination.
Winding up: Insolvency in the digital age?
Are you seeing a trend in the type of firms facing insolvency?
Are there any sectors in your jurisdiction particularly at
risk?
- The UK is seeing a trend of highly leveraged businesses
struggling with an inability to service debt levels in uncertain
global market conditions. - Companies in real estate and construction continue to face high
upfront costs and delays in
project completions, making them vulnerable to funding shortfalls
and market fluctuations. - An increasing number of manufacturing businesses are struggling
with supply chain challenges, the need to decarbonise their
manufacturing processes, and competition from producers
manufacturing their products in lower-wage economies.
Does AI have a place in insolvency proceedings? What
opportunities does it offer, and what safeguards does it
require?
- Routine tasks, such as document review, claim validation, and
report generation can be automated,
reducing time and costs involvedin insolvency proceedings. - AI can help identify fraudulent activities by highlighting
inconsistencies and unusual patterns in financial transactions and
statements. - AI-driven platforms can facilitate communication and
coordination among creditors, debtors, and
other stakeholders, improving transparency and efficiency.
Is the sharing economy at high risk of insolvency? Many
businesses are heavily funded but struggle to turn a profit –
are they at greater risk of running out of money?
Whilst innovative and disruptive, businesses in the sharing
economy face significant risks including:
- Reliance on venture capital for growth and sustainability,
creating pressure to scale rapidly, at the
expense of profitability. - Thin profit margins due to high operational costs, competitive
pricing to attract users, and significant investments in technology
and infrastructure. - High potential for price wars due to competing players
operating in similar markets.
We would recommend: - Prioritising financially sustainable growth over rapid
expansion. - Developing multiple revenue sources to reduce dependency on any
single stream. - Continually seeking ways to optimise operations and reduce
costs. - Proactively engaging with policymakers and adapting business
models to comply with evolving regulations. - Innovating constantly to stay competitive and meet changing
customer demands.
Our latest Visionaries publication features 24 members from 18
jurisdictions. Dive into the first of four insightful chapters
addressing global business challenges in a year of elections, with
this edition covering Technology, Transgressive Behaviour,
Geopolitical Climate, and Intervention & Regulation.
Read the full publication here.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.