The implications of Artificial Intelligence on your Professional Indemnity Insurance
Protect your law firm through understanding the impact of using Artificial Intelligence
There is no doubt that the use of Artificial Intelligence (AI) is fast becoming part of our everyday lives both personal and professional, and the legal industry is no different. Many firms and legal professionals have started to embrace this transformative shift, with generative AI technologies, including ChatGPT, being utilised to enhance efficiency and reduce mundane workloads such as drafting documents and performing initial research.
However, firms must ensure robust risk assessment and management strategies are in place to protect themselves and assess any implications that the use of AI could have on their Professional Indemnity Insurance (PII) cover and on their regulatory requirements.
Advice From Regulatory Bodies
The Solicitors Regulation Authority has not yet implemented any specific regulation updates on generative AI related to use or disclosure of use for client care, stating in a previous update:
“Our regulation focuses on the outcomes firms’ actions produce, not necessarily the tools they use to reach them. However, the use of advanced technologies can help firms meet their consumers’ needs more effectively and affordably. As such, supporting innovation and technology is one of our strategic priorities. We want to help firms and consumers safely gain the benefits that AI can bring.”
However, the SRA and the Law Society regularly comment on new technologies and have previously provided some guidance around this issue, with recommendations that include:
- Clear communication on whether such tools are used, prevents misunderstandings as to how information is produced and how decisions are made.
- If a generative AI tool is used, and the tool does not provide a history of use, it is advisable that you document all inputs, outputs, and system errors to ensure that the use of the tool can be monitored as appropriate.
- If you have decided to use or procure a generative AI tool, ensure that you regularly assess the tool’s relevance and value addition to your practice.
Artificial Intelligence and Professional Indemnity MTC – Minimum Terms and Conditions
The SRA sets out a minimum terms and conditions (MTC) within Solicitors’ Professional Indemnity Insurance (PII) which must be complied with to meet the SRA Indemnity Insurance Rules, and these are designed to protect firms and their clients.
However, these terms traditionally cover legal advice provided by qualified, regulated professionals, not services or advice provided wholly by technology or AI. Consequently, this raises the crucial question of the validity of coverage in scenarios involving AI, especially if robust policies and procedures have not been implemented.
For instance, should a legal service be solely performed by an AI system, without any human input or review, experts from our insurance teams have highlighted that this could leave a gap in an insurance coverage, especially where terminology within T&Cs typically refers to a policy covering services provided or omitted by a person, solicitor, lawyer etc., and does not include wording regarding a machine or AI technology.
Recommendations for Law Firms
Without question, law firms can benefit from the potential that AI and other advancing Legal Tech can offer. Though, when incorporating these new technologies, it is vital that firms take a measured approach to how these are implemented, monitored, and how technology use could impact on their PII cover. Here are a few key points to consider:
- Human Involvement: Firms should take a similar approach as they do with staff supervision and ensure that any AI-driven tasks are supervised by qualified solicitors or legal professionals. As with other tasks, this will help maintain the quality and accuracy of services and ensure the human element is involvement in a way that complies with PII coverage requirements.
- Speak To Your Policy Provider: Ensure you fully understand the extent of coverage for AI-related activities and liaise with your policy provider to ensure adequate protection.
- Risk Management: Review current policies, controls, and procedures (PCPs) to ensure that all relevant processes and supervision protocols are in place. Firms should ensure that additional training on the limitations and proper use of AI tools is provided and that this training is recorded. When conducting Firmwide Risk Assessments, ensure any use of AI is covered within these audits.
- Transparency with Clients: Firms should ensure that they communicate with clients about where AI use in their legal matters is being implemented and document all inputs and outputs.
Sessions for Solicitors - Stay Informed
PIB Insurance Brokers in association with The Strategic Partner hosts regular Sessions for Solicitors, which are free to attend. These will also provide an opportunity for firms to address their concerns regarding professional indemnity insurance obligations.