Advising Corporate Procurement Teams In The Age Of AI

// Ah, there’s nothing quite like the queasy blend of frustration and panic you get as in-house counsel when you discover the company has long engaged in a practice that could subject the company to various legal, compliance, ethical, and reputational risks.

Want to see what I mean? Simply ask your procurement team how many AI-driven software products the company buys from third-party vendors without consulting the legal team.

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Unfortunately, as AI adoption increases, it may become an all-too-familiar feeling for in-house legal leaders. Procurement teams must become more aware of potential AI-related risks and take the appropriate measures to mitigate them. Here are practical tips on how you can advise procurement teams in the age of AI:

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Ask The Right Questions To Prevent Legal Liabilities

AI-driven products and services can lead to various legal risks, including data privacy, intellectual property, and liability issues. But if procurement team members don’t know what to look for, they don’t know what to ask. That’s why it’s essential to ensure that your procurement team:

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• understands how each vendor collects, uses, and stores your data
• confirms that vendors comply with applicable data privacy laws and regulations and any others specific to your industry
• verifies that the vendor properly attained the rights to algorithms, software code, and other intellectual property and also complies with any open-source licensing requirements
• asks vendors whether their models were trained with any protected content
• negotiates indemnification provisions in contracts to guard against liability issues if products malfunction or cause harm to users
• asks vendors how they address ethical concerns such as bias in algorithms and fairness in AI-based decision making
• requires vendors to demonstrate transparency and accountability in their development and deployment of AI products and services.

Consider developing a due diligence checklist with specific questions about AI-related legal risks for the procurement team to evaluate potential vendors. Ongoing training on liability issues, data privacy laws, intellectual property rights, and other relevant topics is another helpful tool to ensure your procurement team remains well-versed in the relevant issues and risks.

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Build Relationships That Help The Business Thrive

Your role is crucial in protecting your company from all angles. As much as thinking about the risks and temporarily halting progress can make us cringe, it can also be the difference between a business success and a legal nightmare. 

If you haven’t already, schedule a meeting with your procurement team to discuss AI product and service provision concerns. Working with business stakeholders to foster a culture of responsible AI management while encouraging the exploration of new technologies can reduce the number of legal issues that take you by surprise going forward. 

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What else do companies need to be thinking about regarding AI?

Does your procurement team have a way to ensure that vendors comply with the required standards?

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Olga V. Mack is the VP at LexisNexis and CEO of Parley Pro, a next-generation contract management company that has pioneered online negotiation technology. Olga embraces legal innovation and had dedicated her career to improving and shaping the future of law. She is convinced that the legal profession will emerge even stronger, more resilient, and more inclusive than before by embracing technology. Olga is also an award-winning general counsel, operations professional, startup advisor, public speaker, adjunct professor, and entrepreneur. She founded the Women Serve on Boards movement that advocates for women to participate on corporate boards of Fortune 500 companies. She authored Get on Board: Earning Your Ticket to a Corporate Board Seat, Fundamentals of Smart Contract Security, and  Blockchain Value: Transforming Business Models, Society, and Communities. She is working on Visual IQ for Lawyers, her next book (ABA 2023). You can follow Olga on Twitter @olgavmack.

Topics

Artificial Intelligence (AI), Biglaw, In-House Counsel, Olga V. Mack