AI Governance for Law Firms: Building the Framework for Responsible Legal Technology Adoption

As artificial intelligence rapidly evolves from experimental technology to essential business infrastructure, law firms face a critical decision: establish solid AI governance frameworks or risk exposure to unprecedented professional and operational hazards. When integrated into the legal workflow, AI tools can boost productivity, accuracy, and consistency, allowing lawyers to refocus their time on higher-value client advisory services. However, this opportunity comes with a responsibility to ensure that AI use aligns with legal ethics, client confidentiality, and the profession’s duty of care. 

AI governance is no longer optional; it is a prerequisite for implementing AI systems responsibly and strategically. It enables firms to manage inherent risks while positioning them to capitalize on emerging technological innovations.

‍

Why do firms need AI governance?

While surveys show that 30.2% of attorneys’ firms are already using AI-based technology tools (ABA 2024 Artificial Intelligence TechReport), only around 10% have specific policies governing the use of generative AI in place (Thomson Reuters Institute 2024 Generative AI in Professional Services Report, p. 18). This gap between adoption and governance leaves attorneys uncertain about how to make the best use of these tools. Due to the complex and opaque nature of AI processing, relying uncritically or on the wrong tools can be dangerous and expose firms to liability concerns.

The stakes are particularly high for law firms, which handle highly sensitive information including intellectual property, financial data, attorney-client communications, and other privileged materials. Furthermore, lawyers are obligated to uphold ethical standards, which must be extended to the adoption of AI into their work. For example, existing guidance such as the American Bar Association’s Formal Opinion 512 on Generative Artificial Intelligence Tools emphasize that lawyers have an obligation to thoroughly assess the security of client data and protect its confidentiality (under Model Rule 1.6); obtain informed client consent before implementing AI tools (Rule 1.6, 1.4); and continuously supervise the use of those tools (Rule 5.3). Translating these ethical obligations into practice demands systematic governance that enables consistent, firm-wide execution.

With proper AI governance, firms can:

• Protect sensitive client information by defining responsible use of AI and ensuring tools comply with their standards
• Ensure consistency and quality in outputs by regulating how AI-generated content should be used, reviewed, and integrated into workflows
• Meet compliance expectations (e.g., ABA Rules of Professional Conduct, EU AI Act, NIST AI Risk Management Framework, individual client contracts, and U.S, state-specific cyber security and data privacy regulations)
• Build client trust through transparency that AI use is intentional, secure, and backed by internal standards
• Scale AI adoption purposefully, driving faster experimentation and uptake of new tools

‍

What does building an AI governance framework require?

Establishing comprehensive AI governance requires a structured approach that addresses both immediate operational needs and long-term strategic objectives. The rapidly shifting landscape of AI also demands that firms develop systems capable of adapting to new regulatory requirements.

Align leadership and innovation teams

According to the 2025 AI Governance Profession Report by IAPP and Cred AI, more than half of the challenges that organizations face when delivering on AI governance are internal. These internal friction points typically manifest from the contention between risk management and innovation, infrequent communication, and unclear priorities for AI-related investments. To streamline the process of adopting AI responsibly, a law firm's general counsel should maintain constant dialogue with innovation teams about new technology and update engagement letters accordingly. Firms could also consider creating a dedicated AI governance committee to oversee policy development and implementation.

Set clear AI usage policies

A well-scoped AI policy should address:

• Permitted tools: Which platforms are approved for firmwide use?
• Use cases: In what situations is AI use appropriate?
• Data handling: What types of client or case information may be used with AI?
• Human review: When is attorney oversight mandatory for AI generated content?
• Documentation requirements: How should AI assistance be recorded and disclosed?

Evaluate AI tools before deployment

Firms should conduct assessments of AI platforms to be used for legal relevance, security standards, data handling practices, and compliance with relevant bar rules. Such evaluations could encompass security architecture assessments, data residency and processing location verification, integrability with existing practice management systems, and alignment with contractual requirements regarding third-party service providers. They should also consider how the tool aligns with the firm’s policies and client expectations.

‍Offer AI education and training

Lack of basic training is one of the most significant barriers to safe and effective AI adoption. According to the ABA TechReport, lawyers frequently cite the time required to learn how to use AI tools as a key concern, and around 74% of law firms offer no form of employee education or training about generative AI. As a result, lawyers are more likely to misuse AI tools, overlook risks, or avoid using them altogether, undermining both compliance and innovation. 

Firms should instead offer practical, role-specific training that covers both the capabilities and limitations of AI tools. Rather than being tedious or complicated, short workshops, recorded demos, or quick reference guides can effectively build confidence and competence. 

Obtain informed consent from clients

When the use of AI tools involves a risk of disclosing client information, Model Rule 1.6 requires that lawyers obtain informed consent. This entails providing a clear, matter-specific explanation of how the tool operates, the grounds for its use, what data it may process, and potential risks to confidentiality. Simply amending engagement letters with generalized provisions is insufficient; lawyers should candidly disclose the extent of the risk that the tools pose in tandem with the benefits. Firms might also consider publishing their internal AI use policies publicly. Approached properly, these steps can reinforce client trust, demonstrate transparency, and indicate a smart, forward-looking approach to AI integration.

Monitor and innovate continuously

AI governance is an evolving practice as new types and uses of AI are introduced to the market daily. To ensure that systems stay up to date, firms could also conduct periodic reviews of how policies are being implemented, create feedback loops for staff to report challenges and ideas, and update governance policies regularly based on feedback and emerging best practices. 

The firms that thrive with AI in the future will not be the ones that rush in blindly, or sit back cautiously. They will build solid frameworks, educate their teams, and create room for responsible experimentation. Implementing AI governance now positions your firm to lead the next phase of legal transformation.

‍

How does SmartEsq fit into this?

At SmartEsq, we partner with forward-thinking law firms that are ready to explore AI with purpose and confidence. Our tools are designed to align with your firm’s governance policies, rather than circumvent them. We never train our models on your firm’s data without explicit consent, and we back every feature with enterprise-grade security to meet your confidentiality standards. Whether you are just getting started or scaling AI firm-wide, SmartEsq helps you innovate and improve your workflow with trust, control, and transparency. 

Visit us at smartesq.ai to learn more.