Generative AI has the potential to revolutionise almost every industry and the energy sector and the legal sectors are no exception. We take a look at the opportunities and challenges facing in-house lawyers in the energy sector in deciding whether and how to utilise this technology to streamline processes, drive efficiency and mitigate risk.

Potential Uses

The list of potential uses for Generative AI are potentially endless but some obvious use in-house legal teams include:

1. Document Drafting and Review

    Products which help automate legal document creation do, of course, already exist. Generative AI has the potential to further enhance these products by learning from previous drafts and revisions. It could be used to quickly compare draft contracts to the in-house style and suggest revisions and to review a whole data bank of standard form contracts and/or existing customer contract to highlight risks or identify key clauses.

    2. Regulatory Compliance

      Generative AI could be used to enhance the in-house regulatory compliance function, perhaps by monitoring or even predicting regulatory updates and automatically flagging issues that need to be addressed in policies and procedures or standard form contracts. AI might also conduct regular compliance audits and or gap analysis to assist the in-house lawyer with their risk management and mitigation role.

      3. Legal Research

      Generative AI's capacity not just to sift through vast amounts of data such as legislation and case reports faster than any human could, but also to analyse that data and to provide tailored answer to specific questions. The use of AI for legal research comes with a health warning though (for which see more below).

      4. Multi-Jurisdictional Capabilities

      In-house lawyers in the energy sector almost invariable have to work on a multi-jurisdictional basis. This means not just dealing with multiple legal systems but also with language barriers. The right took, with the right training, has the capacity to carry out tasks related to multiple jurisdictions simultaneously and to automatically translate documents and transcribe and translate meeting notes virtually instantaneously.

      5. Admin and Efficiency

      AI also has huge scope to enhance the efficiency of the in-house lawyer's day to day work by producing meeting summaries, action trackers, managing diaries and preparing email templates.

        Challenges and Risks

        As ever, where there are opportunities, there are also risks.

        1. Confidentiality, Data Protection and Intellectual Property

        It's well known that once data is entered into a Generative AI system, that data can then be regurgitated by the system in a different context and for a different user. This gives rise to the risk not only that an organisation might compromise its own data or IP, but also that it may inadvertently infringe the rights of others.

        Sensitive, confidential and/or proprietary date should never be entered into an open access tool and this issue will be a paramount concern for in-house lawyers looking to procure AI driven technology. For more on the data protection risks of AI see our article UK ICO warns against the use of generative artificial intelligence | Brodies LLP

        2. AI Hallucination

        Most lawyers will be aware of the case of the New York attorney who used a free AI tool to generate a legal brief which was submitted to the court containing fictitious case references. This is what is known as AI "hallucination" - where the system cannot find the answer to a question, it simply invents one. These inventions can be convincing and for this reason content produced by AI must be verified carefully whether it is going to be used in court or presented internally to the board.

        3. The "black-box problem"

        AI has the capacity to produce very impressive looking content. The problem is that it is impossible to know how it made its decisions and why it arrived at the conclusions it did. This lack of transparency is known as the "black-box problem" and means that in-house lawyers must think carefully about what tasks are really suitable for AI and which require human input and/or review.

        4. Regulation

        As regulators around the world catch-up (or at least try to catch-up) with the fast pace of change in the use of AI, in-house lawyers will have yet another layer of regulatory compliance to address. This will be of particular concern to the energy sector where the in-house lawyer routinely has to navigate a number of different legal systems. For the moment the UK has elected not to attempt to specifically regulate AI while the EU has passed the Artificial Intelligence Act which will be effective from 2026 (for more on this see Regulating AI - UK & EU take divergent approaches | Brodies LLP)

        Conclusion

        There is little doubt that Generative AI has the capacity to change the face of the in-house legal landscape. Is it likely to replace in-house lawyers in the energy sector? Given the hugely complex legal and regulatory environments in which energy businesses operates, this seems unlikely and experienced in-house counsel with their in-depth knowledge of their businesses, commercial as well as legal insights and ability to think creatively will be needed to ensure that AI tools are used to their best effect (and to spot when AI might have got it wrong). For the moment, a cautious approach is required but AI does have the capacity to drive efficiency and free-up in-house counsel to focus on matters of high risk and strategic importance.

        Contributor

        Ken MacDonald

        Partner