Artificial intelligence tools have moved from theoretical concept to practical business reality with remarkable speed, and most organizations are now either actively using AI or evaluating its adoption. The legal landscape surrounding AI has struggled to keep pace with the technology — leaving businesses in a position where they are making decisions about AI implementation with limited guidance on the legal risks those decisions carry. Understanding what those risks are before they materialize is the difference between proactive management and reactive damage control.
Mandelbaum Barrett PC attorney Steven Teppler shared insights on navigating AI legal risks in New Jersey Business Magazine. Teppler practices in the firm’s health care law and corporate practices, advising clients on data security, privacy, cybersecurity, and emerging technology legal issues. His insights in New Jersey Business Magazine reflect the firm’s commitment to helping New Jersey businesses understand the evolving legal challenges posed by artificial intelligence adoption.
Key AI Legal Risk Areas for Businesses
Businesses using AI face legal exposure across several distinct categories. Intellectual property issues arise when AI tools are trained on or generate content that may be subject to third-party copyright claims. The ownership and licensing status of AI-generated outputs remains an unsettled area of law, and businesses that deploy AI-generated content face uncertainty about the strength of any intellectual property protections they can claim in those outputs.
Data privacy concerns arise when AI tools process personal data about employees or customers, implicating applicable privacy laws at the state and federal levels. Employment discrimination risk arises when AI tools are used in hiring, performance evaluation, or other employment decisions — AI systems that produce disparate impacts on protected classes can expose employers to discrimination claims even without any discriminatory intent. Contractual and liability questions arise when AI systems produce errors, including who bears responsibility when an AI-assisted decision causes harm.
Governance and Compliance Considerations
Proactive AI risk management begins with governance. Businesses that deploy AI tools benefit from establishing clear policies on how AI may be used, what data can be fed into AI systems — particularly third-party AI tools that may train on submitted data — and who is responsible for reviewing AI outputs before they are acted upon. Employee training on appropriate AI use, combined with clear policies on which tools are approved, helps prevent the ad hoc adoption that creates governance gaps.
Vendor contracts present another dimension of AI risk. When a business relies on a third-party AI product, the contract governing that relationship should address data security obligations, what happens to submitted data, indemnification for AI-related errors, and the vendor’s obligations if the AI produces outputs that harm the business or its customers. Reviewing these terms with qualified legal counsel before signing is a worthwhile step for any business deploying AI in its operations.
According to the Federal Trade Commission, consumer protection laws apply to AI-powered products and services, and businesses should ensure that claims about AI tools are accurate and that AI use does not result in unfair or deceptive practices. Staying ahead of enforcement in this area requires understanding the regulatory expectations that apply to AI use in your specific industry and context.
Contact Mandelbaum Barrett PC for Technology and AI Legal Guidance
If you have questions about AI legal risks, data privacy, cybersecurity, or other technology law matters affecting your business in New Jersey, the attorneys at Mandelbaum Barrett PC can help.
Reach out through our contact page to speak with our team. We are here to help New Jersey businesses navigate the legal dimensions of artificial intelligence and emerging technology adoption.