Car dealers should ask how their professional advisers use artificial intelligence (AI) and check safeguards for confidential information, a lawyer has warned.
David Bailey, partner at law firm DMH Stallard, said advisers remain responsible for the accuracy of their work when using AI.
His warning raises questions for dealer groups about how external advisers handle sensitive documents, as well as their own use of AI in customer services and communications.
DMH Stallard’s analysis of court decisions and regulatory interventions over the past two years found a consistent expectation that professionals check and validate AI-generated material.
Cases have included lawyers sanctioned for relying on fictitious legal authorities and experts criticised for allowing AI-generated conclusions to influence reports submitted to courts, according to the firm.
Who is responsible when something goes wrong?
Bailey said: “When AI first entered mainstream professional practice, one of the biggest unanswered questions was who would be responsible when something went wrong. We now have a much clearer picture.
“The courts and regulators have been remarkably consistent. If a professional chooses to use AI, they remain responsible for the quality, accuracy and reliability of the advice they provide. AI is a tool, not a defence.”
The Solicitors Regulation Authority (SRA) issued a warning notice in August confirming that using AI does not reduce or transfer solicitors’ professional responsibilities.
Its concerns include inaccurate advice, fabricated legal citations and breaches of client confidentiality.
Bailey said businesses also need to understand the implications of uploading sensitive material to publicly available AI platforms.
He said: “What is perhaps less well understood is the growing risk around confidentiality and privilege.
“Businesses need to think carefully before uploading documents, legal advice or sensitive information into publicly available AI tools, because that information may not enjoy the protections many people assume it does.”
DMH Stallard urged businesses to ask advisers how they use AI, what human checks they undertake and whether confidential information is entered into public systems.
The firm also advised organisations to establish who remains responsible for work produced with AI assistance, understand the limitations of individual tools and keep up with regulatory guidance.
For dealer groups deploying AI in their own operations, its recommendations include considering potential liability arising from automated customer services or communications.
Bailey said: “The answer to the question of who pays when AI gets it wrong has turned out to be reassuringly traditional, usually the professional who was engaged to provide the advice.
“The challenge now is ensuring organisations reap the benefits of AI without creating new legal and commercial risks in the process.”
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