AI Governance Is Not Optional: What Legal Experts Say Every Business Must Do Now

Despite widespread AI investment, only 1% of companies consider themselves mature in how they govern the technology, according to a 2025 McKinsey report. Attorneys advising businesses on AI adoption say governance frameworks are now as important as the tools themselves.

Troy Lieberman, counsel at Nixon Peabody, warns that AI adoption without clear guardrails exposes companies to significant risk. Organizations must establish policies around which AI platforms employees may use, what information can be entered, and when human review is required. He also noted that using AI does not shift legal responsibility to the technology provider: businesses remain legally accountable for decisions made based on AI output.

Katarina Polozie, partner at Woods Oviatt Gilman, highlights the trade secret risk in public AI platforms. Entering proprietary information such as customer lists, pricing data, or code into public AI tools can undermine trade secret protections. She referenced the federal case United States v. Heppner, in which a court found that inputting privileged information into a public generative AI platform waived attorney-client privilege because the platform's privacy policy allowed it to collect and train on that data.

Tim Plunkett, senior counsel at Harris Beach Murtha, emphasized that AI's speed creates amplified risk. "AI can do so much so fast, but it can also do a lot of really bad things really fast, too," Plunkett said. He recommends organizations first inventory all AI tools already in use across the company before drafting governance policies.

Key takeaways:

• Only 1% of companies are mature in AI governance, per a 2025 McKinsey report
• Entering trade secrets into public AI tools can destroy legal protection, per case law
• Businesses remain legally responsible for AI-generated decisions, including in HR, lending, and patient care
• Attorneys recommend inventorying current AI use first, then developing evolving governance policies

Read the full article on Long Island Business News