As artificial intelligence becomes increasingly integrated into business operations, governments around the world are increasing their oversight and triggering a wave of regulations to address risks in this area. Global companies must navigate a patchwork of complex and often contradictory legal requirements.
Your in-house legal department understands regulatory risk, operational context, and cross-functional collaboration, and has the unique ability to lead your organization’s AI governance.
Regulatory trends
AI regulation spans multiple legal areas, including global regulation, sector-specific guidance, and broader frameworks such as consumer protection, labor law, privacy, and security. In the absence of comprehensive federal legislation, U.S. federal agencies are beginning to shape AI oversight through rulemaking and enforcement activities.
Earlier this year, the Federal Trade Commission sued Air AI for “AI washing,” misrepresenting the AI ​​capabilities of a product or service. In recent years, the Consumer Financial Protection Bureau has issued new rules regulating the use of AI and algorithms in home appraisals and appraisals.
The Equal Employment Opportunity Commission previously settled with iTutorGroup for allegedly programming AI to discriminate against certain job applicants. These cases demonstrate increased federal interest in companies’ AI practices through existing consumer protection frameworks.
Nearly every state has introduced or enacted some form of AI legislation that applies to a variety of industries and sectors. Most notably, California led the development of SB 53 (Frontier Artificial Intelligence Transparency Act), a comprehensive law aimed at advanced AI models. Other states have some form of AI law in place, many of which regulate the use of AI in specific industries or sectors.
Globally, countries and regions are also enacting comprehensive AI laws. For example, the European Union’s comprehensive AI law was enacted in 2024 and has since been gradually rolled out across member states, with most substantive requirements coming into force in 2026.
Italy is the first EU member state to implement a national AI law that is consistent with the EU’s AI law. In China, new and effective Generated AI Labeling Regulations apply to internet-based information service providers, requiring them to implicitly and explicitly label AI-generated content where applicable.
Companies that use AI and whose products or services span multiple jurisdictions need to understand the applicability of these regulations. In-house legal teams are naturally equipped to interpret overlapping legal frameworks, anticipate and respond to enforcement trends, and integrate AI governance into overall corporate strategy. In-house teams are close to the business and, combined with legal expertise, are ideally placed to help businesses navigate this situation.
AI governance partnership
Cross-functional capabilities. Legal’s familiarity with the underlying technology allows us to integrate critical risk insights and regulatory considerations to support a more tailored implementation approach.
Because legal teams naturally collaborate cross-functionally with stakeholders and AI technology subject matter experts, legal departments are uniquely positioned to create or obtain a comprehensive inventory of AI uses and risks. Cross-functional capabilities enable legal teams to align AI governance policies with regulatory obligations and the company’s overall strategic business strategy. This will enable a more robust and informed ability to oversee and evaluate primary and third-party vendor diligence and use of AI in contracts.
Protection of privileges. Given that AI is increasing the speed and optimization of internal processes and external services to customers, companies are re-evaluating their systems and procedures to meet the growing needs of their customers faster and at scale. Therefore, the development and implementation of AI is highly proprietary in nature.
Involving in-house legal teams in these conversations allows decision makers to openly discuss AI innovations under attorney-client privilege and understand the legal risks. Legal protection can protect your business strategy from competitors, as opposed to this type of conversation simply being day-to-day business communication.
Board-level AI management. Senior legal leaders work with boards and management teams to translate complex legal and technical issues into strategic business insights.
This experience allows legal departments to elevate AI-related risks into governance discussions and further guide the development and implementation of AI structures within the enterprise. Legal teams can leverage this strategic position to ensure that AI efforts across the enterprise are not only compliant, but aligned with broader business goals.
Operationalization of AI
In-house legal teams can position themselves as strategic business partners and prepare their organizations for responsible AI in several ways.
Develop a comprehensive internal governance framework. Develop clear policies that define responsible implementation of AI. Consider ethical implications across business units.
Conduct an initial AI evaluation. Conduct an impact assessment to understand the scope, context, and decisions that current or future AI tools will have within your enterprise. Understand the limitations of your AI models and maintain up-to-date documentation on use case justification.
Stay informed. Monitor AI usage and impact across your organization, track evolving regulations, educate leaders and employees on policy updates, and understand how third-party vendors are using AI in ways that can impact your business.
Protect confidentiality and trade secrets. Take safeguards to prevent sensitive data from being compromised and privileges being maintained. Use AI tools that encrypt sensitive data or require access controls.
Promote innovation and competition. In-house lawyers must lean into AI to drive their teams toward ethical innovation and compliant implementation. Use only the guardrails necessary to drive strategic growth and minimize legal risk.
This article does not necessarily reflect the opinion of Bloomberg Law, Bloomberg Tax, Bloomberg Government, publisher Bloomberg Industry Group, Inc., or its owners.
Author information
Whitney Ford is Sanofi’s general counsel, advising on U.S. market access strategy, regulatory reform, and AI integration.
Write to us: Author Guidelines
