Navigating AI risk with confidence
11th September, 2025
Why safe implementation and legal backstops matter for every business
Artificial Intelligence is no longer the preserve of big tech. According to the UK Government’s 2024 AI Adoption Report, over 15% of UK businesses are now actively using AI, with a further 20% planning to adopt it within the next year. From customer service chatbots to predictive analytics and automated decision-making tools, AI is rapidly becoming a vital part of how companies grow, innovate and compete.
As a commercial disputes lawyer and Partner at Ward Hadaway, I’ve been watching this shift with great interest. It’s exciting, but it also raises new questions about liability, compliance and how businesses can adopt AI safely without inviting legal risk.
The simple truth is: AI doesn’t eliminate legal responsibility, it introduces new areas of risk that businesses need to understand and manage.
It is not uncommon for businesses to use an AI tool to generate product descriptions or marketing content. What happens if that content turns out to be inaccurate, misleading, or makes claims the business can’t substantiate? Alternatively, a business may integrate a third-party AI platform into its workflow, only to find that it has used copyrighted material or confidential information without permission, whose liability is that? These aren’t abstract risks. These are real-world commercial and reputational exposures that businesses are already facing.
The reality is that many of these issues are only discovered after something has gone wrong. I’m increasingly advising clients in disputes where AI has been used without a clear usage policy, or outside the parameters of what was agreed with customers, staff or suppliers. Whether it’s an intellectual property breach, breach of confidence, defamation, or discrimination, businesses are finding themselves exposed and in reactive mode.
In the UK and beyond, we’re seeing regulators and courts starting to expect greater transparency, accountability, and governance from organisations using AI. That’s especially the case where personal data is involved, or where decisions materially affect individuals. The EU AI Act, while not directly applicable to UK firms does require UK companies that operate in the EU, or sell AI-related products or services within the EU, to comply with the EU AI Act. It is therefore already influencing best practice expectations here at home.
What should businesses be doing to manage AI risk?
First and foremost, don’t wait for a problem to arise before putting governance in place. Just as you wouldn’t launch a new product without considering risk and liability, AI should be treated with the same diligence.
Some practical steps include:
- Developing a clear AI Use Policy that sets boundaries for ethical and legal use internally.
- Conducting Data Protection Impact Assessments when AI tools involve personal data.
- Understanding the terms of use for third-party AI systems, including indemnities, IP ownership and liability limits.
- Training staff so they know where human oversight is critical, especially when decisions impact individuals.
- Considering insurance implications and how traditional policies apply to automated systems.
Where that hasn’t happened, and things have already gone wrong, resolving disputes commercially and quickly becomes critical. Ward Hadaway helps clients untangle liability, respond to legal claims, and protect their position, whether that’s through negotiation, mediation or litigation.
Innovate safely and resolve risk with confidence
Our lawyers work with businesses across sectors to embed legal safeguards into their AI strategies, but also to stand beside them when problems arise.
If your business is navigating an AI-related issue, or needs to proactively put protections in place, please contact Laura Hill.
Article originally featured in Entrepreneurs’ Forum Autumn ’25 Member Magazine
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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