Home What Every Business Should Know About AI in 2025: Legal Perspectives and Predictions

What Every Business Should Know About AI in 2025: Legal Perspectives and Predictions

By: Derek J. Schaffner, Esq.

Entering 2025, artificial intelligence (“AI”) has passed the hype stage and now drives transformation across industries by reshaping business operations, customer interactions, and regulatory environments. Understanding the implications of AI is no longer optional for businesses – it is necessary for navigating growth while minimizing risks. This article provides legal perspectives and predictions for 2025 to help your business adapt to the advancing role of AI.

The Rise of Industry-Specific AI Solutions

Increasingly, AI solutions are becoming tailored to specific industries, ranging from healthcare and finance to retail and manufacturing. While this expanding customization speeds up innovation, it also generates unique legal challenges. For example, AI-driven diagnostic tools in healthcare applications must comply with the Health Insurance Portability and Accountability Act (“HIPAA”) and emerging standards for the protection of patient data. In the finance world, algorithmic trading platforms encounter scrutiny under anti-fraud regulations, thereby requiring transparency in their decision-making processes. Retailers who use AI-powered recommendation systems must comply with consumer protection laws, specifically as to data usage and fairness. Consequently, customized legal strategies are essential to ensure that AI tools comply with industry-specific regulatory requirements while continuing to foster innovation.

Legal Prediction: Businesses will need to collaborate with legal counsel to ensure their AI tools meet regulatory requirements to balance innovation with compliance.

Navigating the New AI Regulatory Landscape

The landscape of AI regulation has undergone a significant shift with President Trump’s decision to rescind the Biden administration’s AI executive order. This move signals a pivot towards less federal oversight in exchange for more innovation, which will impact how businesses approach AI development and deployment. Previously, the Biden order had set the stage for stringent safety and transparency requirements, particularly for AI systems with potential impacts on national security, the economy, or public health.

Internationally, however, the trend towards regulation continues unabated. In 2025, it is likely that more jurisdictions will look to models like the European Union’s AI Act, which categorizes AI systems by risk level and imposes rigorous standards on high-risk applications such as biometric identification and critical infrastructure management. Despite the U.S. federal government’s shift away from regulation, these international frameworks will still influence domestic practices due to global business operations.

Nonetheless, the focus on algorithmic accountability is expected to intensify, with an emphasis on impact assessments for decision-making AI systems, especially in areas like credit scoring or employment decisions. Bias mitigation will also remain a critical area of focus, compelling businesses to prove their AI systems are free from discriminatory practices. Transparency in AI usage, particularly in consumer interactions through tools like recommendation engines or chatbots, is set to become a norm.

With the federal landscape now less defined, businesses might face a patchwork of state-level regulations rather than a unified federal approach, increasing the complexity of compliance. The absence of Biden’s AI order could mean:

  • A temporary relief from some federal reporting obligations; however, this might be replaced with a need to navigate multiple state laws or international standards to maintain market access.
  • More responsibility on businesses to self-regulate and establish AI policies and internal AI governance structures to manage risks, especially in the absence of clear federal guidelines.
  • An opportunity for businesses to innovate more freely, but with the caveat that they must still prepare for potential future regulations or reputational risks if AI systems are not managed responsibly.

Legal Prediction: Compliance with AI regulations will indeed grow more complex. Companies must develop AI policies and invest in comprehensive AI governance frameworks to anticipate and adapt to both the lack of federal oversight and the potential for varied state or international regulatory pressures.

Data Privacy and Security Remain Critical

The collection, storage, and use of data behind the large language models that power AI systems present ongoing legal challenges. Data privacy laws such as the EU’s General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”) are seeing stricter enforcement, and new regulations may introduce specific provisions regarding AI’s use of personal data. Cross-border data transfer restrictions are also evolving, thereby requiring businesses using AI across international boundaries to adapt.

Legal Prediction: Companies must proactively audit their AI systems to ensure compliance with both existing and emerging data privacy standards.

Intellectual Property Challenges

Intellectual property issues are becoming more complex as AI systems generate original content. Key questions regarding copyright ownership and the protection of proprietary algorithms remain at the forefront. For example, businesses must consider whether the developer of an AI system or the user prompting the AI system owns the rights to AI-generated works. Contractual agreements outlining ownership and usage rights are critical, as is staying updated on legal developments in this space.

Legal Prediction: Companies using AI for content creation must adopt robust intellectual property strategies and contractual provisions to safeguard their assets and avoid disputes.

Ethical AI Becomes Prominent

Ethical considerations regarding AI are also gaining prominence, influencing both regulatory policies and public perception. Issues such as bias, accountability, and transparency are becoming legal mandates. Businesses using AI should implement internal policies that address fairness and ethical use, engage stakeholders to encourage transparency, and regularly audit AI systems to identify and mitigate potential risks.

Legal Prediction: Ethical lapses in AI usage will increasingly lead to legal repercussions, making proactive risk management critical.

Increasing Litigation Risks

As AI adoption grows, so does the probability of litigation. Businesses may face lawsuits related to discrimination, such as claims that AI systems create bias in hiring, lending, or other decision-making processes. Data breaches involving AI-collected information or product liability cases resulting from errors or malfunctions in AI-powered products are also potential risks.

Legal Prediction: Businesses should strengthen their litigation readiness by conducting risk assessments and maintaining thorough documentation of the development and deployment processes for AI systems.

Key Considerations for Businesses

To maximize the benefits of AI while minimizing risks in 2025, businesses should consider the following:

  • Develop AI Governance Policies
    • Establish policies for the ethical and transparent use of AI, including mechanisms for monitoring and accountability.
  • Train Employees
    • Educate your employees on the legal and ethical implications of AI to ensure responsible usage across the organization.
  • Engage Stakeholders
    • Involve key stakeholders, including customers, employees, and regulators, in discussions about your AI strategy to foster trust and collaboration.
  • Stay Informed
    • Monitor legal and regulatory developments to proactively adapt your AI systems and policies as needed.

Conclusion: Preparing for the AI-Driven Future

AI offers unique opportunities for innovation and growth, but it also introduces new legal challenges. As businesses navigate the transformative landscape of 2025, it is essential to stay informed about AI trends and their legal implications. By proactively addressing compliance, data privacy, intellectual property, and ethical considerations, your business can capture AI’s potential for innovation and growth while reducing risks.

Derek J. Schaffner is a Technology attorney and partner at the Boston-based law firm of Conn Kavanaugh Rosenthal Peisch & Ford, LLC.

He can be reached at dschaffner@connkavanaugh.com.

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