Legal points to review first in generative AI service terms and privacy rules

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When a company adopts a generative AI service, the legal review should go beyond how convenient the tool is. Terms of service, privacy policy, data processing terms and any security documentation all need reading with one question in mind: can we actually put our own information into this, and use the output in our work?

Check the checklist before opening the terms

Before diving into the fine print, it is worth confirming: whether inputs train the model, and whether that depends on the plan or account type; whether sending information to the vendor counts as a third-party disclosure or subcontracting under existing client confidentiality obligations; who owns the output and what happens if it infringes a third party's rights; how personal data is classified if it is entered; and whether a lawyer reviews AI output before anything goes external.

Input data and confidentiality obligations

The first thing to check is how input data is used and how long it is retained, since enterprise plans often restrict training on inputs while free or individual plans may not. Whether sending a client's information to the AI vendor counts as a prohibited third-party disclosure under an existing NDA depends on the contract language and how the tool is actually used, a question that deserves attention especially for M&A or unpublished business information.

Output rights and personal data

Output ownership, infringement liability and indemnification vary by service, and since most vendors do not guarantee accuracy, AI output used for contract comments should go through a lawyer before it reaches a client. Where personal data is involved, such as recruiting, HR or customer support, check whether the arrangement qualifies as a permitted subcontracting relationship or a third-party transfer, including any cross-border transfer, since the rules keep evolving and deserve a fresh check at the time of actual adoption.