- Deloitte survey shows CLOs increasingly prioritize Gen AI over traditional legal initiatives.
- 93% of CLOs see potential value in Gen AI within the next year, and 95% are already engaged.
- CLOs face challenges in managing Gen AI use, with only 35% confident in their organization’s knowledge and 27% in their skills to execute initiatives.
- The EU’s AI Act introduces strict regulations for AI, classifying Gen AI as “general-purpose” AI. Non-compliance leads to significant fines.
- 99% of CLOs are implementing or planning Gen AI initiatives, but only 15% have clearly defined roles and responsibilities.
- AI governance remains a challenge, with 43% of UK companies citing it as a primary concern.
- The regulatory environment is pushing CLOs to focus on Gen AI, with the phased implementation of laws extending to 2026.
- Companies like Unilever proactively prepare for responsible AI use through safeguards and cross-functional teams.
Main AI News:
A recent global insight survey conducted by Deloitte has highlighted a significant shift in focus among chief legal officers (CLOs), who increasingly prioritize generative AI (Gen AI) over traditional legal-specific initiatives. The survey, which included responses from 460 legal executives, revealed that 93% of CLOs believe Gen AI can add value to their organizations within the next year, with an impressive 95% already engaging with the technology in some capacity.
As Gen AI becomes more pervasive across various industries, often bypassing central directives, CLOs are grappling with the challenge of managing its use while ensuring compliance with evolving regulations. Notably, only 35% of CLOs feel confident that their organizations possess the necessary knowledge to oversee Gen AI initiatives, and a mere 27% believe their businesses have the skills required to execute these projects effectively.
This growing focus on Gen AI among CLOs is unfolding within a global landscape marked by heightened regulatory scrutiny. The EU’s AI Act, which was enacted in August, represents a major development in the legal frameworks surrounding AI technologies. The Act, which took four years to develop, seeks to regulate AI creation, deployment, and application through a risk-based approach. This legislation defines Gen AI as “general-purpose” AI, which brings stringent requirements, including adherence to EU copyright laws and implementing robust cybersecurity measures. Non-compliance could result in hefty fines of up to €35 million (US$37.7 million) or 7% of global annual revenues, whichever is higher.
The Deloitte survey also revealed that nearly all CLOs (99%) are implementing or planning to implement Gen AI initiatives. However, significant gaps in understanding and execution persist, with only 15% of CLOs reporting that roles and responsibilities for Gen AI initiatives are clearly defined within their organizations. Similarly, a separate Informatica survey found that 43% of UK companies cited AI governance as a primary challenge.
Although the AI Act allows for a phased implementation, with some laws not fully taking effect until 2026, the regulatory environment compels CLOs to focus on Gen AI and its associated complexities. As organizations ramp up their investment in Gen AI, 75% have allocated budgets for the technology in the upcoming financial year, and the need for clear regulatory guidance is increasingly urgent. Companies like Unilever are taking proactive steps by establishing safeguards and testing use cases through cross-functional teams, a strategy that aligns with industry leaders’ recognition of the importance of a well-defined framework for AI governance.
The Deloitte survey underscores a critical juncture for CLOs, who must now bridge the gaps in knowledge and execution to harness the full potential of Gen AI while navigating the intricacies of compliance in an era of escalating regulatory oversight. As the regulatory landscape continues to evolve, CLOs must stay ahead of the curve to manage the opportunities and risks that Gen AI presents effectively.
Conclusion:Â
The increasing focus of chief legal officers on generative AI signals a pivotal shift in corporate governance and risk management strategies. As Gen AI becomes more integrated into business operations, CLOs are compelled to navigate a complex regulatory environment, especially with stringent laws like the EU’s AI Act coming into force. This trend highlights a growing need for specialized knowledge and skills in AI governance within organizations. For the market, this shift suggests that companies will likely invest heavily in technology and compliance measures, driving demand for AI expertise, legal advisory services, and robust AI governance frameworks. The rapid adoption of Gen AI, coupled with evolving regulations, could also lead to increased competition as businesses strive to leverage AI while staying compliant, ultimately reshaping the competitive landscape in various industries.
