Mar 05, 2024

Develop or Outsource Your Artificial Intelligence Tools? A Predicament for Businesses

General Counsel By Steven Aquino
Person on a computer using Artificial intelligence tools for their business

The other week, I was chatting with a CEO, and he had a dilemma.

His company held extremely valuable IP and trade secrets. He felt strongly that A.I. models could maximize their value, or maybe even lead to a breakthrough. But the company didn’t have the capital to develop the solution in-house, and he didn’t want to tap into the capital markets to raise it — and, potentially, give up some control of the enterprise he’d built.

So, I mentioned, you could take certain steps to protect the company and use a third-party-developed A.I. solution to avoid development costs.

Therein lay the predicament.

Working with a partner created a risk — a few of them, actually. There was the chance that the company’s confidential information could be exposed once they connected with a third-party.

And even with solid information security protocols in place, relying on a partner meant losing some control of the company’s data and having to trust someone outside the company to keep the information confidential.

NDAs, insurance, and indemnities are great, but you can’t un-ring a bell, after all. Then there is the risk that the company might face a suit, or the executives might even have personal liability, if this happened.

The choice CEO ultimately made in this instance isn’t the point. It’s that he was seriously reckoning with the issue and considering that, if he used an outside A.I. solution, he needed to ensure that the company did so only after mitigating its risks as much as possible.

All company leaders should be thinking about A.I. use this way. The potential of A.I. is massive. It also creates a duty of responsible use. Directors and executives have to be thinking of both sides of this coin before they deploy it.

If you’re interested in learning more, please contact Steven Aquino at or (202) 793-3576. You can also reach us at our general information email at