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L4 · Legal oversight of company AI7 min read

The company AI policy: write it, then make it work

An AI acceptable-use policy tells everyone in the company what AI they may use, with what data, for what purposes, and what checks apply. Legal usually drafts it with security, IT, HR and the AI lead.

What a good policy covers

  • Approved tools and how to request new ones.
  • Data rules: a simple matrix of data classes and tools.
  • Prohibited uses: for example, uploading confidential data to unapproved tools, automated decisions about people without review, impersonation, or AI-generated content presented as human where disclosure is required.
  • Human review: who must check AI output before it is relied on or published.
  • Transparency: when to tell customers, colleagues or counterparties that AI was used.
  • IP and confidentiality: inputs you have rights to; outputs treated as company information.
  • Incidents: how to report a problem.
  • Accountability: consequences for breaches.

Policies fail without the rest

A policy is only as good as the system around it:

  • Approved tools that are good enough that people use them.
  • Training with real examples.
  • Technical controls (blocking, data loss prevention, logging) where risk is high.
  • Monitoring and spot checks.
  • Updates at least twice a year.

Keep it short

Two pages people read beat twenty pages nobody reads. Put detail in short guides by role (legal, HR, marketing, engineering).

What this means for the General Counsel

What this means for a General Counsel

You will be asked to own or co-own the AI policy. Insist that it ships with approved tools, training and monitoring, or it will be ignored, and legal will be blamed when it is.

For the legal team itself, add a stricter annex: verification standards for filings, rules for privileged matters and expectations of outside counsel.

Finally, agree who owns the policy after launch. A named owner, a review date and a simple channel for questions ("Can I use this tool for that?") keep it alive. Track the questions you receive: they show where the policy is unclear and where the business needs a new approved tool.

Real example

In July 2025, Judge Anna M. Manasco of the U.S. District Court for the Northern District of Alabama disqualified three lawyers of the law firm Butler Snow from further participation in Johnson v. Dunn after filings contained case citations fabricated by ChatGPT. The judge noted that the firm's repeated internal warnings and policies on AI made the situation more serious, not less. Source: Bloomberg Law — Butler Snow attorneys disqualified over fake AI case citations (Johnson v. Dunn, N.D. Ala., July 2025) ↗

Use it

Quick check · 3 questions

  1. 1.Why can a policy alone fail to prevent AI misuse?

  2. 2.Which belongs in the data section of an AI policy?

  3. 3.What did Johnson v. Dunn show about firm AI policies?

0 of 3 answered

Sources

Last reviewed 2026-10-01.