Recognize the potential and legal obstacles of AI for your company
The solution for managing directors and companies
Artificial Intelligence (AI) opens up new possibilities for innovation and increased efficiency. But with these opportunities also come significant legal obligations and challenges . Our team provides comprehensive legal advice to ensure that your AI projects are legally compliant and future-proof.
As a managing director, complying with the legal rules for AI systems and AI models, such as the AI Act, GDPR, copyright and product liability, is essential for you to take advantage of the growth opportunities.
Otherwise, you risk developing or operating impermissible AI applications and being penalized by the authorities or by the market. In addition, there is your personal liability and criminal liability risk as a managing director.
Tailored AI compliance systems secure the growth of your company and help you sleep more soundly at night.
Recognize your potential for security and sustainable growth with AI.
Our solutions
- Legal issues regarding the use of artificial intelligence (AI): liability, copyright and data protection
- AI – Secure and Successful
What are the most important duties of a managing director when it comes to AI applications?
The development and use of artificial intelligence (AI) in Germany and the European Union are subject to strict legal regulations. These include, among other things, the requirements of the new AI Act, data protection regulations, product liability issues, and ethical considerations.
Application of the AI Act
The European Union has created a legal framework with the AI Act that sets clear guidelines for the development and application of AI systems. The AI Act distinguishes between different risk classes of AI applications and sets specific requirements for their operators.
AI system is a machine-based system that derives an output from input that influences the physical or virtual environment and may be adaptable and to some extent autonomous. (An AI model is a precursor).
The personal scope of application is mainly aimed at “providers” and “deployers” of AI. A provider is someone who develops an AI system or model and places it on the market or puts it into service under their own name. A deployer is anyone who uses an AI system under their own authority, except where the use takes place in the course of a personal, non-professional activity. The AI Act applies to all providers that place an AI system or model on the market or put it into service in the EU, to deployers of AI applications established in the EU, and to providers and deployers of AI applications whose output is used in the EU. The personal scope of application is therefore very broad.
From the material scope of application AI used for national security purposes or exclusively for scientific research and development is excluded. Testing AI models before they are placed on the market is not regulated either. Finally, personal, non-professional use of AI is not subject to the AI Act.
The AI Act follows a risk-based approach: The higher the risk associated with an AI system, the more extensive the corresponding obligations are.
High-risk AI systems:
High-risk AI systems (HRKIS) are the AI systems listed in Annex III to the AI Act. These include:
- Biometrics (e.g., remote identification systems, emotion recognition), Annex III No. 1
- Critical infrastructure (e.g. road traffic, water, gas, heat and electricity supply), Annex III No. 2
- General and vocational education (e.g. access, admission, evaluation, monitoring of testing behavior), Annex III No. 3
- Employment, personnel management and access to self-employment (e.g., active sourcing, promotion, termination), Annex III No. 4
- Access to and use of essential private and public services (e.g., social benefits, creditworthiness assessment, credit scoring, risk assessment in life and health insurance, classification of emergency calls), Annex III No. 5
- Law enforcement, Annex III No. 6
- Migration, asylum and border control, Annex III No. 7
- Administration of justice and democratic processes, Annex III No. 8
Exception: An HRKIS does not pose a significant risk to health, safety or fundamental rights if, among other things, it does not materially influence the outcome of decision-making (Art. 6(3) AI Act). This exception does not apply to profiling.
Obligations of deployers of high-risk AI systems
The AI Law provides for the following obligations for deployers of high-risk AI systems:
- Ensuring the AI literacy among staff and other persons dealing with the operation and use of AI systems. (Art. 4 AI Act)
- Refraining from prohibited practices. (Art. 5 AI Act)
- Implementation of a risk management system. (Art. 9 KI-VO)
- Ensuring human oversight. (Art. 26(2) AI Act)
- Monitoring of the input data controlled by the deployer to ensure that it is relevant to the purpose of the AI system and representative. (Art. 26(4) AI Act)
- Monitoring the operation of the AI system. (Art. 26(5) AI Act)
- Information obligations toward providers, distributors and market surveillance authorities if the AI system presents a high risk to health, safety or fundamental rights. (Art. 26(5) AI Act)
- Notification obligations in the event of serious incidents toward the provider, importer, distributor and market surveillance authority. (Art. 26(5) AI Act)
- Retention of automatically generated logs for an appropriate period, at least 6 months. (Art. 26(5) AI Act)
- Informing the employee representatives (if any) and the affected employees before the AI system is put into use in the workplace. (Art. 26(7) AI Act)
- Conducting a data protection impact assessment, if applicable. (Art. 26(9) AI Act)
- Informing the persons affected by the AI system. (Art. 26(11) AI Act)
- Cooperation with relevant authorities to implement the AI Act. (Art. 26(12) AI Act)
- Informing the persons affected when emotion recognition systems or AI for biometric categorization are operated. (Art. 50(3) AI Act)
- Disclosure of the use of AI applications that generate deepfakes of image, audio or video content. (Art. 50(4) AI Act)
- Disclosure for AI-generated/manipulated texts that inform the public on matters of public interest, unless the content has undergone human review or editorial control and someone holds responsibility for its publication, or it serves law enforcement purposes. (Art. 50(4) AI Act)
- Taking necessary corrective measures for products presenting a risk under the Market Surveillance Regulation (Regulation (EU) 2019/1020) if authorities find that an AI system does not meet the requirements and obligations of the AI Act. (Art. 79(2) AI Act)
- Taking necessary corrective measures when an authority determines that the AI system complies with the AI Act, but nevertheless poses a risk to the health, safety or fundamental rights of individuals or the protection of public interests. (Art. 82(1) AI Act)
- Explanation of the decision-making process in individual cases toward persons affected by a decision of the AI system that has legal effects or adversely affects health, safety or fundamental rights (exception: critical infrastructure). (Art. 86(1) AI Act).
- Ensuring AI literacy among staff and other persons dealing with the operation and use of AI applications. (Art. 4 AI Act)
- Refraining from prohibited practices. (Art. 5 AI Act)
- Disclosure of the use of AI systems that generate Deepfakes of image, audio or video content. (Art. 50(4) AI Act)
- Disclosure for AI-generated/manipulated texts that inform the public on matters of public interest, unless the content has undergone human review or editorial control and someone holds responsibility for its publication, or it serves law enforcement purposes. (Art. 50(4) AI Act)
Obligations for deployers of low-risk AI applications
Reporting obligations and transparency
Deployers of AI applications are required to report any incidents or malfunctions that could lead to significant risks without undue delay to the competent authorities. In addition, users must be informed clearly and comprehensibly about the use of AI applications.
Documentation and reporting obligations
A thorough documentation of all development and operational processes is required. Operators must prepare regular reports on the performance and safety of the AI systems and make them available to the supervisory authorities.
Data protection
Compliance with the General Data Protection Regulation (GDPR) is crucial when AI systems process personal data. Companies must ensure that all data processing operations are designed to be transparent and compliant with data protection regulations . We provide comprehensive advice on all aspects of data protection and support you in implementing appropriate measures.
Liability
Liability issues related to the use of AI are complex and multifaceted. Operators of AI applications must be aware of the potential risks and take appropriate precautions. This includes both contractual arrangements as well as the implementation of technical and organizational measures, to limit liability. We help you identify and minimize potential liability risks.
Ethical guidelines
The development and application of AI must always be carried out with consideration for ethical standards . The European Union places great importance on ensuring that AI systems are developed responsibly and in accordance with ethical principles. We advise you on the relevant ethical guidelines and support you in integrating them into your development process.
AI opportunities for companies
AI technologies offer significant advantages for companies, including process optimization, improved customer interactions, and innovative business models. Our legal advice ensures that you can optimally leverage these AI opportunities, taking into account all legal requirements.
Optimization of business processes
By using AI, business processes can be made more efficient and optimized. We help you understand and comply with the legal framework for the use of AI in your processes.
Improved decision-making
AI can help companies make better-informed and faster decisions. We advise you on the legal aspects of AI-based decision-making and help you implement such systems in compliance with the law.
Development of new products and services
AI opens up new possibilities for the development of innovative products and services. We help you meet the legal requirements and successfully bring your innovations to the market.
Prohibited AI practices
Certain applications of AI are generally prohibited under the AI Act. These include:
- The use of AI for subliminal influencing or deliberate Manipulation of a person in order to influence their decision-making in such a way that significant harm is caused to them or to other persons.
- The Exploiting a vulnerability or special need for protection of a person with the aim of influencing their behavior to the detriment of that person or other persons.
- The introduction of a social scoring system, in which people’s behavior is analyzed and they are then either disadvantaged in situations unrelated to the analyzed behavior, or disadvantaged in a generally disproportionate manner on the basis of the analyzed behavior.
- The creation of a risk profile on the probability of committing a crime based on profiling.
- The use of AI to create or expansion of facial recognition databases based on facial images from the internet or recordings from surveillance cameras.
- The Emotion recognition using AI in the workplace and in educational institutions.
- The use of biometric data to categorize people on the basis of sensitive personal data such as race, political opinions or religious beliefs.
- The use of real-time remote identification systems for law enforcement purposes.
For some of these provisions there are exceptions in the area of law enforcement. Real-time remote identification systems may, for example, be used to search for kidnapping victims, to prevent a terrorist attack, or to track down suspects of certain serious crimes.
Violations of the prohibition on the use of these AI systems can result in fines of up to 35 million euros or up to 7 % of a company’s total worldwide annual turnover may be imposed, whichever is higher. The wording of the prohibited AI practices is partly problematic, as terms such as “subliminal influence” or “disproportionate disadvantage” may not be sufficiently specific.
Tip for users:
The use of prohibited AI practices carries heavy penalties. Before using an AI system in a way that could fall into one of the prohibited categories, detailed legal advice should be obtained.
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Here you will find answers to frequently asked questions about our services and offerings. Learn more about our company and how we can help you. If you have any other questions about us, please feel free to contact us.
What kind of business advice does clience.legal offer?
clience.legal focuses on the legal and economic needs of your company. As the responsible party, you and your duties and challenges as owner or managing director are at the center of our attention. We support you in implementing compliance measures and advise you in the field of sustainability. Should your company find itself in crisis or be threatened with insolvency, we are at your side. Likewise, we help you improve the reputation and sales of your company. All in all, we are your business law firm.
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Compliance and sustainability are important aspects of business operations. They help to comply with the requirements of the LKSG and ESG and to minimize liability risks. clience.legal supports you as the responsible party in your company in these challenges.
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clience.legal has many years of experience as a crisis and insolvency advisor and can help you lead your company successfully through difficult times. We advise you competently and with determination on the restructuring and reorganization of your company. As responsible managing director or owner, you are the focus of our attention to avoid personal risks, liability, and criminal liability for you.
How does the consultation work and what is the free initial contact at clience.legal?
The free initial contact at clience.legal is a telephone contact in which we determine your requirements and provide a free initial assessment and recommendations for action. This service is free of charge and takes 15-20 minutes. During this conversation, we provide our initial assessment and discuss the possibilities of our collaboration.
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clience.legal offers you the choice between an hourly fee of 350 euros net per hour or a fixed flat fee. In the initial consultation, we will discuss together which model best suits you and your company. In certain cases, we offer pro bono or purely success-based advice.
