AI in law firms: Ethics panels clearing path forward

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Whenever new technologies become available to lawyers, ethical concerns initially pose a significant hurdle to adoption. This friction is understandable. Legal professionals are necessarily cautious about tinkering with trusted legal workflows and processes, sometimes resulting in a reluctance to embrace new and innovative ways of working. Our clients trust us with highly sensitive information, and we have an obligation to ensure that confidentiality is not compromised when implementing new software.

We rely on ethics opinions to assist with technology transitions, but their arrival isn’t always as timely as we’d like. Historically, ethics committees have taken years to weigh in on issues like lawyers’ use of social media or cloud computing. That delay in issuing guidance often slows down or even prevents industry-wide technology adoption.

With the arrival of generative artificial intelligence (AI), a roadmap to ethical adoption was needed, and quickly, given the unprecedented rate of advancement. Fortunately, bar associations nationwide rose to the occasion, issuing timely and in-depth guidance in months, not years. Since the spring of 2023, many jurisdictions released guidance or opinions on the ethics of using AI in law firms: California, Florida, New Jersey, Michigan, New York, Pennsylvania, Kentucky, the American Bar Association, Virginia, D.C., and New Mexico.

Most recently, North Carolina joined their ranks in November, handing down 2024 Formal Ethics Opinion 1.  In the opinion, the Ethics Committee addressed six inquiries about ethical AI adoption.

First, the committee concluded that lawyers may integrate AI into their practice as long as they do so competently, protect client confidentiality, and properly supervise AI-generated work. This aligns with existing ethical obligations requiring attorneys to maintain competence, safeguard client information, and oversee nonlawyer assistants.

Second, the opinion addressed whether attorneys can share client information with third-party AI programs. According to the committee, lawyers may use these tools only after they have fully vetted the provider and verified that adequate security measures are in place to prevent unauthorized access or disclosure, thus ensuring compliance with confidentiality rules.

Third, the committee reviewed ethical obligations when using in-house AI systems, opining that doing so does not exempt lawyers from their ethical responsibilities. Attorneys must implement strong security measures and remain vigilant against potential vulnerabilities, maintaining the same diligence level as third-party AI services.

Fourth, the opinion emphasized that lawyers remain fully responsible for the accuracy and reliability of AI-generated pleadings submitted to the court. Attorneys must carefully review all AI outputs to ensure legal and factual accuracy, just as they would any other work product.

Fifth, the committee considered whether AI use must be disclosed to clients. The committee explained that attorneys do not need to inform clients if AI is used for routine tasks like legal research. However consent is required if AI is employed for “substantive tasks in furtherance of the representation.” That scenario is the same as work performed by a nonlawyer or third-party service, both of which require client consent.

Finally, the issue of billing practices was addressed. The committee determined that lawyers must bill clients only for the time spent performing the work, and cannot bill for time saved as a result of using AI. However, attorneys may charge clients for reasonable AI-related expenses, provided those costs are disclosed upfront. Notably, the committee suggested that lawyers consider flat fee payment structures when drafting documents with AI.

Like the guidance that preceded it, this opinion provides North Carolina lawyers with a clear roadmap to AI adoption. The committee reinforces AI’s benefits and offers practical steps to ensure compliance with ethical duties. With abundant ethics guidance available, there’s no excuse to fall behind. Now is the time to embrace AI and take full advantage of all it offers.

Nicole Black is a Rochester, New York, attorney, author, journalist, and principal legal insight strategist at MyCase, LawPay, CASEpeer, and Docketwise, AffiniPay companies.