From Detroit to Ann Arbor, Michigan businesses are leaning into AI—not as a buzzword, but as a tool. In auto and advanced manufacturing, AI predicts equipment failure and smooths supply chains. In construction and real estate, it estimates bids, flags schedule risks, and reviews drawings. In professional services, it summarizes contracts, drafts proposals, and triages customer support.
Please note this blog post should be used for learning and illustrative purposes. It is not a substitute for consultation with an attorney with expertise in this area. If you have questions about a specific legal issue, we always recommend that you consult an attorney to discuss the particulars of your case.
Powerful? Absolutely. But the legal landscape hasn’t taken a vacation. Most risks aren’t brand-new laws—they’re old rules applied to new tools.
Important things business owners should investigate.
Contracts:
If you’re buying AI tools, your biggest risk is hidden in the fine print. Who owns the outputs? Who is responsible when the model hallucinates and your team relies on it? Are you giving the vendor a license to your data—and can they train on it? Push for clear IP ownership, strict limits on training, and warranties that the vendor’s model and data don’t infringe anyone else’s rights.
Trade Secrets and Confidentiality:
AI thrives on data. Your competitive edge depends on keeping the right data out of the wrong prompts. Update your confidentiality policies: what may never be pasted into an AI tool, which tools are approved, and how sensitive content is masked or sandboxed. Train employees and audit usage. If a departing employee walks out with model prompts or fine-tuned weights derived from your data, treat that like any other trade-secret event: fast investigation, hold notices, and, if needed, court relief.
Intellectual Property:
AI can help draft code, specs, and marketing copy. But who owns the result, and what if some of it mirrors someone else’s protected work? Nail down contributor and assignment agreements with employees and contractors. For customer deliverables, include representations about tool usage and the right to use underlying training materials—or disclaimers if you won’t give them.
Hiring and Marketing:
If AI is used for employment screening, lending, or consumer decisions, the same anti-discrimination and unfair-practices rules still apply. Document your use cases, test for disparate impact, and keep a human in the loop on important decisions. If AI is marketing for you, remember that deceptive advertising rules don’t care whether a human or a model wrote the claim.
Cybersecurity and Incident Response:
AI expands your attack surface. Treat model outputs like any other system: access controls, logging, and incident response plans that cover prompt injection and data leakage. If you integrate third-party models, map data flows so you know which vendors would be in scope for a breach notice.
Records and E-discovery:
If your teams chat with AI to make decisions, that activity can be discoverable. Decide what you’ll retain, for how long, and how you’ll collect it. Make sure legal holds reach AI workspaces.
So, what’s a practical path forward?
Start with an AI use register: who is using what, for which tasks, with which data. Update core documents—acceptable-use, confidentiality, vendor checklists, and employee training. Pilot in low-risk areas first. And when the use case touches revenue, reputation, or regulated decisions, build in human review and measurable quality checks.
If this raised questions for your team—about contracts, confidentiality, or policy updates—talk with counsel early. Good process now is cheaper than emergency litigation later.
Contact Tishkoff
Tishkoff PLC specializes in business law and litigation. For inquiries, contact us at www.tish.law/contact/. & check out Tishkoff PLC’s Website (www.tish.law/), eBooks (www.tish.law/e-books), Blogs (www.tish.law/blog) and References (www.tish.law/resources).
Resources:
- Federal contracting/marketing claims (AI tools)
Federal Trade Commission, Keep Your AI Claims in Check (Feb. 27, 2023), https://www.ftc.gov. - Trade secrets & confidentiality
18 U.S.C. § 1836 (2025). - Intellectual property (AI-generated works)
U.S. Copyright Office, Copyright Registration Guidance: Works Containing Material Generated by Artificial Intelligence, 88 Fed. Reg. 16,190 (Mar. 16, 2023). - Employment, discrimination & fairness
U.S. Equal Emp. Opportunity Comm’n, Select Issues: Assessing Adverse Impact in Software, Algorithms, and AI Used in Employment Selection Procedures Under Title VII (May 18, 2023), https://www.eeoc.gov. - Cybersecurity & prompt injection
OWASP Foundation, LLM Top 10 v1.1 (2024), https://genai.owasp.org/resource/llm-top-10-for-llms-v1-1/. - Records, retention & e-discovery
Fed. R. Civ. P. 37(e). - Lawyer accuracy & AI misuse
Mata v. Avianca, Inc., 678 F. Supp. 3d 443 (S.D.N.Y. 2023).
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