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How legal leaders can stay ahead of the compliance curve

Legal
Angus Denny our consultant managing the role
Author: Angus Denny
Artificial intelligence is transforming the legal industry and is starting to reshape everything from contract review to regulatory compliance. But as AI adoption accelerates in law firms across the UK, are legal teams truly prepared for the regulatory and ethical challenges ahead?
Angus Denny, Senior Manager of the legal division at Marks Sattin, shares insights on how legal departments can navigate AI governance, mitigate risks, and ensure their organisations stay compliant in an evolving landscape:
This shift is not a distant possibility; it is happening now. Over the past 18 months, and particularly in the last year, legal teams and in-house counsel have witnessed a seismic shift in how legal work is approached. Many law firms are racing to build proprietary AI models to maintain a competitive edge. The days when firms could rely on their human capital alone to drive profitability are rapidly fading. Those who fail to act now risk being left behind.

Navigating an Industry transformed by AI

The role of the lawyer is evolving at a pace that few in the industry are prepared for. The fundamental skills that have historically defined legal expertise: deep knowledge of case law, careful interpretation of legal texts, and mastery of verbal nuance, are becoming secondary to a lawyer’s ability to work alongside AI. Within the next five years, the industry will look entirely different. AI will handle the bulk of the technical legal work, leaving human lawyers to focus on areas where machines cannot yet compete, such as emotional intelligence, strategic thinking, and negotiation. However, this transformation raises critical questions. If junior lawyers no longer build their expertise through traditional legal tasks, how will they develop the skills required to be effective legal professionals?

Why Legal foundations still matter in the AI age

The widespread adoption of AI risks creating a generation of lawyers who are highly proficient in using AI but lack the fundamental legal skills that have long been the foundation of the profession. Digital literacy is undoubtedly an asset, but legal expertise cannot be reduced to an algorithm. Junior lawyers must first learn to analyse, argue, and interpret the law manually, just as one must learn arithmetic before relying on a calculator. If they skip this stage, the profession risks producing legal practitioners who are technically efficient but lack the depth of understanding required for high-stakes decision-making.

As the technology continues to be integrated into legal workflows, regulatory considerations are also evolving. Legal professionals are no strangers to regulatory oversight, and AI regulations will be no exception. The primary concern is not whether AI should be regulated but how these regulations will shape legal practice."

Unlike other industries, where AI governance is still a developing area, legal professionals are accustomed to dealing with intricate regulatory frameworks. But regulation must move faster. There are clear lessons to be learned from other sectors, such as cryptocurrency, where a lack of early regulation led to widespread fraud and malpractice.
Beyond the practical and regulatory implications of AI in legal work, there are also profound ethical considerations to address, Angus explains: 

AI’s increasing role in decision-making raises significant concerns, particularly when applied to sensitive legal matters. "

While AI’s involvement in relatively straightforward areas poses minimal ethical risks, its potential application in the justice system  introduces far more serious dilemmas. The notion of AI presiding over legal proceedings, is, of course and extreme, but it is not some dystopian fantasy, it is a real and pressing risk. If AI is given too much authority in legal decision-making, we risk creating a system in which human values are subordinated to machine logic. The consequences could be devastating. A legal system that prioritises efficiency over justice, speed over fairness, and data-driven analysis over human reasoning would fundamentally alter the fabric of society. Legal decision-making is not solely about processing facts and laws; it requires empathy, moral judgment, and a nuanced understanding of human behaviour.
Given these challenges, stringent regulation and control over AI in legal practice are imperative. The industry must take proactive steps to ensure that AI is deployed responsibly, with ethical considerations at the forefront. Regulation should be designed and enforced by human legal professionals, not AI-driven systems.

Who should be responsible for regulating the use of advanced technology in legal practice?

A key responsibility falls on law firms to act responsibly regarding the application of AI during training contracts and on regulatory bodies, s to safeguard the future of the profession. Training programmes must be structured in a way that ensures junior lawyers develop core skills before integrating AI into their practice. The industry cannot afford to produce a generation of lawyers who lack the ability to think critically and independently”, warned Angus. “Instead, AI should be positioned as an enhancement tool, enabling legal professionals to work more efficiently while preserving the essential human elements of legal practice.
As AI regulations take shape, Heads of Legal have a crucial role to play in staying ahead of compliance requirements. The legal industry is witnessing a rapidly shifting regulatory landscape, with key legislative developments such as the EU AI Act and UK government guidelines emerging as focal points. These evolving regulations will substantially impact corporate compliance and governance, requiring legal teams to adapt swiftly. To mitigate legal and ethical risks, organisations must establish clear policies on AI usage, ensuring that their tools align with fairness, transparency, and accountability standards. Risks such as biased AI decision-making, data privacy concerns, and regulatory breaches must be carefully managed through rigorous oversight mechanisms.

The Legal Leader’s role in governing emerging technologies

Preparing legal teams for AI governance and compliance will require a multifaceted approach.  Legal leaders must take the lead in shaping AI policies within their organisations, embedding robust risk management frameworks, and conducting regular AI audits. Vendor risk assessments will become increasingly important, ensuring that third-party AI solutions meet regulatory and ethical standards. Additionally, collaboration with compliance teams will be essential in maintaining alignment between legal strategies and overarching corporate governance.
The challenge ahead is immense, but so is the opportunity. AI will not eliminate the need for lawyers, but it will redefine their role in ways the industry has yet to fully comprehend. Those who fail to adapt will find themselves displaced. Those who embrace AI while maintaining the core principles of the profession, ethical responsibility, human judgment, and regulatory compliance, will shape the future of legal practice.
To conclude the future of AI in the legal industry hinges on striking the right balance between technological efficiency and human expertise. There is no going back. AI is here, and it is changing everything. The legal industry must decide now whether it will lead this transformation or be overtaken by it. The choices made today will determine whether the sector emerges stronger, more efficient, and more ethical, or whether it surrenders too much, too soon, to machines.

How Marks Sattin can help you

Financial Services companies using AI must recognise the long-term significance of integrating legal expertise into their operations, with over 30 years of experience, we at Marks Sattin have helped several organisations find their next legal professional. 
Visit our dedicated legal page to discover how we can support your hiring needs. Alternatively, submit a brief here and we will call you to discuss your needs.
14/04/25
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