Artificial Intelligence and the Law: What Legal Professionals Need to Know
Artificial intelligence (AI) is reshaping industries worldwide, and the legal profession is no exception. Once confined to automating routine tasks, AI is now influencing legal research, compliance, and even courtroom proceedings. While AI presents significant opportunities for efficiency and cost reduction, it also introduces new risks that legal professionals must navigate. The challenge in 2025 is not whether AI will change the legal landscape—it already has—but how lawyers, regulators, and businesses can adapt to these changes while maintaining ethical, regulatory, and professional standards.
The rise of AI in legal practice has already been met with significant legal and regulatory scrutiny. In 2023, the AI-powered legal services company DoNotPay faced a class-action lawsuit in California, with plaintiffs alleging that the platform engaged in the unauthorized practice of law. The lawsuit raised serious concerns about the boundaries of AI in legal representation and underscored the risks of relying on unregulated AI tools for legal advice. While AI can assist lawyers, it cannot yet replace them, and companies leveraging AI-powered solutions must be mindful of ethical and regulatory limits. The DoNotPay case serves as a cautionary tale for firms looking to integrate AI into client-facing services without the necessary legal oversight.
Beyond concerns about the unauthorized practice of law, AI is also at the center of complex intellectual property (IP) disputes. In a widely followed case, Getty Images sued Stability AI in the UK for allegedly using millions of copyrighted images without permission to train its AI model. The lawsuit raises fundamental questions about how AI-generated content interacts with existing copyright laws. As AI becomes more sophisticated in creating written and visual content, legal professionals must closely monitor how courts define AI’s role in copyright infringement and fair use. This case will likely set important precedents for businesses using AI to generate legal documents, contracts, or other written materials.
Despite these legal challenges, AI is undeniably enhancing certain areas of legal practice. AI-powered contract review platforms are now capable of identifying key clauses, inconsistencies, and potential risks in legal agreements faster and with greater accuracy than junior associates. AI-assisted legal research tools have also cut down the time required to find relevant case law, allowing attorneys to focus on complex analysis rather than sifting through massive databases. While these efficiencies are clear, firms must be cautious about over-relying on AI. A recent study by Stanford University found that AI models designed for legal research “hallucinated” incorrect case law in approximately 17% of responses. These inaccuracies highlight why human oversight remains essential. Lawyers using AI-driven tools must verify outputs to ensure they are legally sound before applying them in practice.
AI is also transforming compliance and risk management, particularly in highly regulated industries such as finance and healthcare. Large financial institutions have adopted AI to enhance due diligence processes, flag suspicious transactions, and monitor evolving regulatory requirements. For instance, PNC Bank recently implemented an AI-driven system to streamline its legal bill review process, improving efficiency and cost management. However, AI-driven compliance tools are not immune to bias. If algorithms are trained on flawed or incomplete datasets, they can inadvertently produce discriminatory outcomes, leading to regulatory fines and reputational damage. Legal and compliance professionals must therefore ensure that AI-driven compliance tools are regularly audited, tested for biases, and aligned with current regulations.
Looking ahead, AI’s impact on the legal profession will continue to grow, and professionals must proactively prepare for these changes. One critical step is developing an AI literacy strategy—lawyers and compliance officers should understand how AI works, its limitations, and where it can add value. Firms should also establish clear internal policies on AI use, ensuring that legal professionals maintain responsibility for AI-assisted work and that clients understand the role AI plays in delivering services. Additionally, staying informed on AI-related regulations and case law will be essential as governments worldwide refine their approach to AI oversight. The European Union’s AI Act, expected to set a global benchmark for AI regulation, will impose new requirements on high-risk AI systems, including those used in legal decision-making and compliance. In the U.S., regulators are increasingly scrutinizing AI’s role in employment, privacy, and consumer protection, signaling that businesses must prepare for evolving legal obligations.
Adapting to AI in legal practice is not about resisting change but about using technology responsibly and strategically. Legal professionals must balance innovation with ethical considerations, ensuring that AI enhances rather than undermines the profession’s core values. The firms and legal departments that take proactive steps to integrate AI thoughtfully—while maintaining rigorous oversight—will be best positioned to thrive in this rapidly evolving landscape.
Key Takeaways
- AI is changing the legal profession by streamlining tasks such as contract review, legal research, and compliance monitoring, but it is not a substitute for legal expertise.
- Lawsuits such as Getty Images v. Stability AI and DoNotPay’s class-action case demonstrate that AI raises complex legal questions around intellectual property and unauthorized legal practice.
- AI-driven legal tools are useful but not infallible. Legal professionals must verify AI-generated research and ensure that outputs are accurate and free from bias.
- Compliance professionals leveraging AI must monitor regulatory developments, particularly as global frameworks such as the EU AI Act set stricter rules for high-risk AI applications.
- Law firms and businesses should develop clear AI policies, provide training on AI tools, and establish governance structures to ensure responsible AI use in legal practice.
As AI continues to evolve, legal professionals must adapt to ensure they harness its benefits while mitigating risks. By staying informed, setting responsible AI policies, and maintaining human oversight, lawyers and compliance professionals can effectively integrate AI into their practices without compromising legal and ethical standards.