Contracts

Lawyers deploying AI agents into client work and business operations face a critical gap in liability allocation: existing professional-conduct rules do not clearly assign responsibility when autonomous systems act with minimal human oversight. An Above the Law analysis argues that contract drafters, risk managers, and counsel must now assess the degree of control an organization actually maintains over an AI agent's permissions, decision-making, and supervision before assigning liability to the organization, the user, the vendor, or another party.

Palantir CEO Alex Karp has publicly attacked low-quality AI outputs as "slop," positioning the company's AI Platform (AIP) as a secure, enterprise-grade alternative built on its Foundry data infrastructure. The criticism comes as Palantir faces investor concerns that it may lose market share to cheaper, faster standalone large language models from OpenAI and Anthropic—competitors that don't require Palantir's ontology-based data backbone.

Greg Brockman's personal diary emerged this week as central evidence in Elon Musk's lawsuit against OpenAI, with the co-founder and president testifying about his internal deliberations over converting the organization from nonprofit to for-profit status. The diary directly addresses Musk's core claim that OpenAI deceived him by abandoning its original mission to develop artificial intelligence for humanity's benefit. Testimony also revealed inflammatory communications: text messages in which Musk threatened to make Brockman and CEO Sam Altman "the most hated men in America" if no settlement was reached, and a 2017 meeting where Musk tore a painting from the wall after cofounders rejected his demand for majority equity.

Connecticut's legislature passed the Artificial Intelligence Responsibility and Transparency Act on May 11, 2026, with Governor Ned Lamont expected to sign it into law. The bill imposes new compliance obligations on employers using automated decision tools in recruiting, hiring, promotion, discipline, and termination. Key requirements include disclosure to affected employees, bias testing, human oversight mechanisms, and documentation of anti-discrimination safeguards. The Connecticut Attorney General will enforce the statute. Vendors and platform developers face information-sharing duties tied to their clients' compliance obligations.

Organizations across all sectors are facing a wave of litigation over their data practices and AI systems. According to a Baker Donelson report, these legal challenges now extend well beyond technology companies and data brokers to affect organizations of every size that rely on data for operations, network security, regulatory compliance, and contractual obligations. The disputes involve civil liberties groups, workers' advocates, and privacy organizations pursuing claims centered on data privacy violations, algorithmic bias, unauthorized data use, AI system liability, and worker surveillance.

Anthropic has asked a California federal judge to rule that its use of copyrighted materials to train Claude qualifies as transformative fair use, comparing the AI's training process to how humans learn by reading and absorbing themes. The filing stands apart from the $1.5 billion class-action settlement in Bartz v. Anthropic, where the claims deadline passed on March 30, 2026, and a fairness hearing is scheduled for May 14, 2026, in San Francisco federal court.

Legal AI tools are reshaping law firm economics. Document review, drafting, and research are now 60–70% faster, with individual attorneys expected to save 190–240 billable hours annually. Thomson Reuters' 2025 Future of Professionals Report quantifies this as $20–32 billion in time savings across the U.S. market. Major clients—Meta, Zscaler, UBS—are already demanding "AI discounts" and refusing to pay for work automatable by machine. The pressure is immediate and client-driven.

Elon Musk's lawsuit against OpenAI proceeded to trial in California federal court, where a jury rejected his claims that CEO Sam Altman and President Greg Brockman violated an early agreement to maintain the company's AI research under nonprofit control. The case centered on OpenAI's structural transformation from a nonprofit research organization to a for-profit entity capable of raising substantial capital and entering commercial partnerships. Musk, a co-founder and early investor who departed the organization years ago, alleged that Altman and Brockman breached foundational commitments about the company's governance and mission.

Microsoft released Legal Agent on April 30, 2026, a specialized AI tool embedded directly into Microsoft Word for contract analysis and drafting. The platform performs clause-by-clause reviews against customizable playbooks, generates negotiation-ready redlines with transparent tracked changes, compares document versions to surface risks, and produces precise edits—all while preserving Word's native formatting and change-tracking features. Legal Agent uses structured workflows and deterministic resolution rather than general-purpose AI models, reducing processing time and cost. The tool operates within Microsoft 365 security controls and is immediately available through the Frontier program for Windows desktop users in the US. Microsoft explicitly states the tool does not provide legal advice and requires attorney verification of all outputs.

Anthropic's CFO Krishna Rao is managing an unprecedented scaling challenge. In early 2026, CEO Dario Amodei disclosed that the company's growth trajectory had exploded far beyond projections—Anthropic is on track to expand roughly 80 times in a single year, compared to the originally planned 10–15 times. This surge has forced the company to renegotiate major cloud and infrastructure agreements with AWS and other hyperscalers while simultaneously managing service outages and capacity constraints.