A General Counsel's Playbook for Containing AI Litigation and Compliance Risks

This article discusses the growing legal and compliance challenges that general counsel face with the increasing use of AI systems in their organizations. It outlines key strategies to manage AI-related risks, including classifying use cases, demanding traceability, tightening vendor contracts, and embedding AI into governance frameworks.

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General counsel are now accountable for AI systems they did not directly purchase or fully understand, but must defend under overlapping regulatory regimes in the EU, UK, and US. Existing laws around fraud, misrepresentation, and unfair practices are being applied to AI systems, even as vendors embed opaque language models and agent-based decision engines into core workflows with limited documentation and auditability. To manage this 'infinite' AI risk, general counsel must take a proactive approach: classifying AI use cases by risk level, demanding robust traceability and security controls, tightening vendor contracts, and embedding AI systems into three-lines-of-defense governance frameworks (business ownership, independent risk/compliance oversight, and internal audit testing). The goal is to turn amorphous AI risk into a documented, explainable program that can withstand legal discovery, regulatory review, and expert scrutiny.