Inviting AI into the Boardroom
Artificial intelligence (“AI”) has quickly embedded itself into nearly every level of corporate activity – from research assistance to transforming entire operations. Reportedly, 84% of Australians in office jobs are already using AI at work, and its applications are only improving from here. While AI has undeniably improved business productivity and capabilities, the technology is rapidly evolving. With such rapid developments, AI’s advancements present an ever-growing list of legal challenges, outpacing its regulatory solutions.
In this uncertain landscape, board and executive teams must be alert to the risks that come with AI adoption. Recently, there has been an increased trend of AI tools used to transcribe internal discussions, especially in board meetings. Although AI-generated transcripts are used for transparency and efficiency, it introduces significant legal exposures, particularly in the event of litigation.
Can you keep your AI adoption a secret?
In the context of litigation, AI-generated transcripts may be discoverable under Australian civil procedure rules unless protected by a valid claim of legal privilege. This presents a tension within board dynamics. On one hand, the existence of a catch-all record of discussions may prevent directors’ willingness to discuss and make meaningful contributions during board meetings. On the other hand, where directors continue to speak candidly regardless, the company and its directors are put in a position of broader exposure in any potential proceedings. Unlike traditional board minutes, which are designed to summarise discussions and highlight key decisions, AI transcripts capture every word and opinions conversed in the decision making process which could be misconstrued.
Which recorded document prevails?
It is likely that a formal meeting minutes is prepared alongside the AI-generated transcript, raising an issue of legal ambiguity of which document is to be considered the official record.
Further to the issue is what happens when the two documents contradict each other? It may be the case that the inconsistencies are used against the company or its directors. The existence of multiple records is a risk that companies should be aware of when transcribing board discussions with AI, particularly during this time of legal ambiguity.
Amending discoverable transcripts
Once litigation commences, all Australian jurisdictions criminalise the destruction or alteration of evidence relevant to proceedings. In comparison to other traditional documents, AI-generated transcripts:
- often cannot be permanently deleted, especially if stored on third-party servers;
- leave data evidence of amendments and edits; and
- may remain accessible to the service provider, even after attempting to delete.
Waiving privilege
AI transcribing tools also raise concerns of whether privilege that would ordinarily exist over the discussion still exists. Some AI providers reserve broad rights to reuse and store uploaded data. Where these terms apply, they may unintentionally waive any legal privilege that would otherwise apply to certain board discussions.
Companies and directors must be careful to review the terms of the platform being used to ensure they retain data ownership and align with the company’s confidentiality obligations.
Cybersecurity concerns
Where an AI provider retains ownership of the data that is uploaded onto its platform, a concern on the cybersecurity safety of the data is presented. In Perforce’s 2025 State of Data Compliance and Security Report, 60% of 280 selected organisations worldwide reported to have experienced data breaches or theft within AI testing and development.
Mitigating the risks
It is not to say that AI transcription should be banned from the boardroom altogether, but directors need to use and manage it with caution. Boards should consider the following mitigation strategies:
- Restrict use to appropriate meetings and avoid AI transcribing during highly sensitive or privileged discussions.
- Ensure automatic transcript features such as Co Pilot are turned off.
- Review and control access to view and edit transcripts.
- Carefully review AI provider’s terms and conditions.
Conclusion
As AI continues to evolve, so too should the governance practices that surround it. Companies must balance progress with caution, especially when AI adoption intersect with legal risks that are currently ambiguous. Without thoughtful AI policies and oversight, companies may be unknowingly exposing themselves to unnecessary legal exposure.
Queries
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Disclaimer
This information is general in nature. It is intended to express the state of affairs as of the date of publication. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.