Board Directors Are Using AI — Here's the Legal Framework They Need to Follow

A growing share of corporate boards are now using artificial intelligence tools to support their work, but the legal and fiduciary implications remain underexplored. According to a PwC survey, 35% of directors reported using AI tools in the boardroom — a figure that signals how quickly AI has become embedded in governance workflows, even without formal guardrails.

Sullivan & Cromwell partner Francis J. Aquila, writing for Reuters' Practical Law The Journal, argues that while AI creates real opportunities for board efficiency, it also introduces legal and strategic risks that directors must actively manage — especially in high-scrutiny contexts like shareholder activism.

Three Categories of Board AI Use

The memo identifies three distinct ways boards are currently deploying AI:

• Administrative support — scheduling, agenda preparation, and materials distribution
• Information synthesis — notetaking and summarizing complex board materials (flagged as particularly sensitive given confidentiality and attorney-client privilege concerns)
• Substantive analytical assistance — supporting directors in analysis, due diligence, and decision-making

Key Considerations

Boards using AI must account for fiduciary duty implications: directors cannot delegate judgment to an AI system, and over-reliance on AI-generated analysis could expose the board to legal challenge. The risks are amplified in shareholder activism situations, where investor and litigation scrutiny intensifies. Best practices include establishing clear AI use policies, ensuring board discussions remain privileged when AI tools are involved, and maintaining robust oversight of AI outputs.

Read the full article on Reuters Practical Law The Journal