Category: Client Alert

Client Alert: Friend or Foe? Legal Risks Arising From ChatGPT and Other Generative AI Software

Introduction

Recent breakthroughs in generative artificial intelligence (AI) have captured significant media attention. Developers argue that the technology, which learns from data to produce new text, visual, or audio content based on a user’s prompt, will turbocharge productivity and revolutionize business. Organizations in sectors ranging from banking to health care to journalism are already exploring integrating tools like OpenAI’s ChatGPT chatbot and DALL-E image generator into their workplaces.

These new tools should be approached with a great deal of caution as introducing generative AI into your business could create a complex minefield of legal risks. The technology raises significant dangers related to breaches of confidentiality and data privacy, intellectual property infringement, obligations to consumers, and liabilities for negligence, defamation, or discrimination related to the use of false or biased information.

Earlier in June, a Manhattan lawyer faced sanctions in federal court for filing a legal brief generated by ChatGPT which included several citations to nonexistent cases. After being scolded by the judge for relying on “legal gibberish” generated by AI, the attorney admitted that he had no idea that ChatGPT could fabricate cases. At a recent United States Senate hearing on the dangers of AI and potential regulatory safeguards, OpenAI’s CEO, Sam Altman, practically begged lawmakers to create a new AI regulatory agency that would license, test, and screen AI models. This is an unprecedented act by a tech leader. Around the world, authorities are eager to tighten regulations related to AI and changes may be on the horizon.

In this article, legal dangers related to the use of generative AI will be discussed in five specific areas: confidentiality and data privacy, intellectual property, obligations to consumers, false information, and bias and discrimination.

Generative AI and Gibberish

Artificial intelligence generally refers to technology that utilizes data to perform tasks typically done by humans, such as analysis, pattern-recognition, and prediction. One particular subset of AI technology—generative AI—is responsible for the current cultural and corporate metamorphosis. Of the fleet of emerging generative AI products, ChatGPT has grabbed the greatest share of headlines. AI developer OpenAI released the online chatbot in November 2022, with bankrolling from Microsoft. The company launched an update, GPT-4, in March 2023.

ChatGPT has impressed—and even stunned—with its ability to create unique content that sounds convincingly human. OpenAI’s system and rival tools from Google and Bing are what AI developers call “large language models” (LLMs). Using a huge library of text data that includes books, articles, research papers, blogs, and social media posts, LLMs are “trained” to decode, analyze, and produce language.These AI applications can process and respond to a user’s prompts in an instant. They’re capable of handling requests that are far more sophisticated than simple web searches.

For instance, ChatGPT will eagerly respond to an essay question on the Roman Empire, craft a Shakespearean sonnet about any subject, suggest improvements to computer code, or devise a reply to your mother-in-law’s email. Other popular generative AI models can design graphic art, replicate voices, produce songs, or even put together a rudimentary sitcom episode. Many of these new tools are widely available online and at no charge, or with a relatively modest subscription fee.

An Overview of Select Legal Risks

The power of generative AI technology is already transforming the workforce, and in ways we never could have imagined just a year ago. LLMs like ChatGPT are now instantly finishing certain research, analysis, writing, or administrative tasks that would take hours for a human employee to complete. However, the risks associated with implementing generative AI tools are extensive and demand careful consideration. We are continuing to monitor developing elements of these risks as they unfold.

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BG’s 2022 In Review

Passionately practicing law while doing good work for our clients and communities is at the heart of what we do here at BG.

In our “2022 In Review” newsletter, we highlight the work we’ve done for our valued clients (including a sneak peek of a couple of early 2023 successes), introduce our new partners and associates, and spotlight our pro bono work and diversity initiatives. Thank you for taking just a few moments to flip through its pages – we hope you enjoy it.

Click on the link here to open the newsletter in a beautiful magazine-style flippable format.

“If It Ain’t Broke, Don’t Fix It” – SCOTUS Examines Expanding the Attorney-Client Privilege for Dual Purpose Communications

Katherine E. Charonko and Elizabeth L. Stryker

The Supreme Court is currently considering a case that could expand the scope of the attorney-client privilege in the context of dual-purpose communications – such as, in this case, communications made to a law firm that also prepares tax returns. The question before the Court is: what is the appropriate test to determine whether a communication involving both legal and non-legal advice is protected by the attorney-client privilege? This case, In re Grand Jury, concerns documents that the Petitioner, a law firm specializing in tax law, claims are privileged. Petitioner asserts that these allegedly privileged materials concern tax law issues that arise upon expatriation from the United States and include legal advice regarding determining ownership of cryptocurrency assets, appropriate methods for asset valuation, and tax filing strategies. The Petitioner law firm also prepared filings for the client, an early promoter of bitcoin, including a certification of compliance with expatriation tax requirements. Continue reading ““If It Ain’t Broke, Don’t Fix It” – SCOTUS Examines Expanding the Attorney-Client Privilege for Dual Purpose Communications”

New Non-Compete Legislation Takes Effect in D.C.

by J. Jeffrey Craven, Michael de León Hawthorne, and Abraham B. Reiss

Introduction and Background

Washington, D.C.’s new non-compete law, the “Non-Compete Clarification Amendment Act of 2022” (the “Amended Act”) went into effect last month. As of October 1, 2022, employers operating in the District of Columbia are prohibited from using most non-compete provisions, with key exceptions. The Amendment Act is not retroactive: non-competition agreements predating October 1, 2022, are not affected, although employers may still want to review such non-compete provisions with their legal counsel.

The new legislation represents a toned-down version of the “Ban on Non-Compete Agreements Amendment Act of 2020,” an outright ban on non-competes covering nearly all D.C. employees, passed by the city council in December 2020. The 2020 ban, which became law in January 2021, would have constituted one of the most employee-friendly non-compete laws in the country. However, significant backlash from D.C. business interests effectively pressured the city council to delay its implementation and draft a more modest version of the law. On June 12, 2022, the council passed the Amended Act, which includes important employer-friendly exemptions that had been requested by the D.C. business lobby.

Covered and Exempted Employees

All current and prospective non-governmental employers in D.C. are prohibited from using non-compete language in agreements with their “covered employees.” Covered employees are defined as workers who do not qualify as “highly compensated” (discussed below) and either spend more than 50% of their work time for their employer in the District or spend a “substantial amount” of their work time in D.C. and not more than 50% in another jurisdiction. Both remote and in-person employees qualify, as well as newly hired employees who have yet to begin working, provided an employer can reasonably anticipate that they will spend most of their work time in D.C.

Employers may use non-compete restrictions for their “highly compensated” employees, defined as those whose total annual compensation, including wages or salaries as well as bonuses, commissions, vested stock, and overtime pay, exceeds $150,000. For medical specialists, the minimum qualifying annual compensation is $250,000. However, non-competes for these employees must clearly stipulate any geographic limitations and the length of time covered after separation is capped at 1 year (2 years for medical specialists). “Broadcast employees” do not qualify as highly compensated, regardless of what they earn and are defined by the Amended Act as any “on or off-air creator (such as an anchor, disc jockey, editor, producer, program host, reporter, or writer)” working at any D.C. station or network that provides broadcast services. Minimum qualifying annual compensation values will be adjusted based on the local Consumer Price Index beginning on January 1, 2024.

The new law also includes an anti-moonlighting provision allowing employers to restrict employees who also work simultaneous, separate employment. Employers may use non-compete provisions for such simultaneous employment when they “reasonably believe” that their employee’s second job would result in a conflict of interest, disclosure of confidential information, or the breach of industry rules or local or federal laws and regulations. The legislation also permits non-competition provisions in the context of long-term incentive agreements in which employers award bonuses, equity, and/or stock as performance-based rewards.

In some professions, governing associations already bar the use of non-competes. For instance, the ethics rules of the American Bar Association (ABA) prohibit non-competition clauses in agreements among attorneys.

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Take Two: Biden’s Budget Proposes Tax Hikes

Alex Serber and Stephen Putnoki-Higgins

On March 28, 2022, President Biden announced his 2023 federal budget (Budget), which is often referred to as the President’s Green Book. While much of the Budget harkens back to the “Build Back Better Framework” (Framework), the Budget narrows down some of the Framework’s loftier goals and re-focuses on Biden’s “new economic vision,” which consists of reducing costs for families, reducing the deficit, and building a better America. More specifically, Biden stated that:

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BG Client Alert – Pandemic-Era Requests for Workplace Accommodations by Caregivers: Navigating Employer Liability Under New EEOC Guidance and Applicable Law

On March 14, 2022, the Equal Employment Opportunity Commission (EEOC) issued new technical assistance guidance entitled “The COVID-19 Pandemic and Caregiver Discrimination Under Federal Employment Discrimination Laws.” In doing so, the EEOC recognized that “[t]he COVID-19 pandemic has significantly impacted employees’ work and personal obligations” and “required millions of Americans with caregiving responsibilities for children, spouses, partners, older relatives, individuals with disabilities, or other individuals to quickly adjust to vastly changed circumstances.”
Continue reading “BG Client Alert – Pandemic-Era Requests for Workplace Accommodations by Caregivers: Navigating Employer Liability Under New EEOC Guidance and Applicable Law”

BG Client Alert – COVID Confusion: New Florida Law Imposes Additional Exemption Requirements on Employers with Mandatory Vaccination Policies

Jaclyn Clark

On November 18, 2021, Florida passed a new law during a special legislative session that bans private employers in the state from implementing mandatory vaccination policies for their workforce unless they provide opportunities for their employees to request exemptions to such policies for: (1) medical reasons (including pregnancy or anticipated pregnancy); (2) sincerely held religious beliefs; (3) COVID-19 “immunity”;(4) the employee’s agreement to submit to periodic testing; or (5) the employee’s agreement to comply with an employer-provided Personal Protective Equipment (“PPE”) requirement.

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