Insights

Washington – August 15, 2024: The 2025 edition of The Best Lawyers in America® has recognized 42 Crowell & Moring lawyers as "Best Lawyers" and 29 lawyers as “Ones to Watch.”

AI tools have significantly transformed how companies operate, but they come with serious legal risks that are only now taking shape. A recent ruling by a federal judge in the U.S. District Court for the Southern District of New York highlights one such risk: certain inputs and outputs from commercial AI models may not be considered privileged attorney-client communications or protected by the work-product doctrine.

The Supreme Court last week blessed a broad reading of the federal wire fraud statute, resolving a circuit split over whether economic loss is an element of fraudulent inducement and bolstering the Government’s future enforcement of procurement fraud. In Kousisis et al. v. United States (unanimous in judgment), the Court upheld the conviction of a government contractor for falsely representing compliance with disadvantaged business enterprise (DBE) requirements in contracts awarded by the Pennsylvania Department of Transportation (PennDOT), despite completing the contracts to PennDOT’s satisfaction. The Court held that a material misrepresentation used to deceive someone into parting with money or property is sufficient for a federal wire fraud conviction, regardless of whether the victim suffered any economic loss.

Over the past few years, the use of Artificial Intelligence (“AI”) has exploded across multiple industries and many financial services institutions have come to rely on AI—or claim to rely on AI—to generate, assist, and complete business objectives.  So, too, has the regulatory scrutiny around “AI washing,” or firms’ overstating or misrepresenting their use of AI to attract investors.  Similar to "greenwashing," where regulators have scrutinized public claims by companies that they are more environmentally friendly than they actually are, the concept of AI washing has come into sharp focus for the Securities and Exchange Commission (“SEC”), evidenced by multiple public warnings and two recent enforcement actions.

This podcast episode features the following speakers: