For years, construction has relied on custom and tradition, combined with sweat, steel, and human grit. But now, a new kind of worker has joined the crew and it does not need safety helmets or coffee breaks. Artificial intelligence, or AI, is reshaping the construction industry from the ground up, resulting in faster builds, fewer errors, and a smarter way to work, one digital brick at a time. But does this innovation come at a legal cost? Without proper preparation, all the benefits from AI could be gone in an instant. This article provides smart strategies to help your AI systems work for you without crossing legal or ethical lines.
HOW CAN AI BENEFIT THE INDUSTRY?
By now, everyone has heard about AI and its functions to some degree or another. For modern contractors in particular, AI can quickly read, analyze, and synthesize contractual provisions, identifying risks and determining areas for negotiation. AI’s speed and efficiency at risk management is especially helpful when preparing and reviewing amendments and change orders, as the system would likely be trained on your preferences and procedures and could quickly cross-reference other agreements and projects.
AI also can revolutionize workflow automation, assigning tasks, tracking progress, and monitoring obligations, both on and off the jobsite. Automated data entry and extraction allow construction professionals to focus on getting the job done faster, even assisting with regulatory compliance, like reviewing zoning laws and suggesting required permits. AI can act as its own form of due diligence and can even predict when disputes are likely to arise and what the outcome of those disputes could be. More importantly, AI can assist with overall safety, including jobsite monitoring, wearable safety devices, and GPS tracking.
WHAT ARE THE RISKS?
While AI can and will change the future of the construction industry, it is not without legal risk. Because an effective AI system is only as good as the data it is trained on, construction industry professionals must be prepared to protect against flawed guidance. Moreover, AI opportunities are growing every day, but many systems still require customization and significant investment. Therefore, prudent contractors must be aware of the legal risks presented by AI, including intellectual property infringement as well as violations of labor law, consumer privacy protections, and personal injury law.
Although AI opens almost unlimited doors for design-build professionals, use of AI in design creates intellectual property questions. If an AI-system designs renderings and drawings, who owns the intellectual property? The designer or the AI-system developer? This question remains unanswered but can be mitigated with proper risk allocation, including clear contractual provisions outlining ownership of AI creations and AI-generated output. Contractors should choose their software and AI providers carefully, paying close attention to licensing agreements and usage rights.
Even if you do not do design-build work, the use of AI can be controversial in any industry that uses human labor, especially when workers are concerned about job displacement. For unionized employees, the National Labor Relations Act has been construed to apply to the use of AI, and misuse of the technology could lead to unfair labor practice charges if the use of AI results in unfair labor practices or undermines collective bargaining rights.
The use of AI will necessarily include the use of increased technology in your daily tasks, but with that increased use comes the increased risk of issues like data breaches and AI errors. Modern contracting professionals should take care to protect employee, company, and customer proprietary information and ensure all systems have the appropriate protections, including cybersecurity insurance.
For contractors working with consumers, the use of AI can also lead to increased risk under consumer protection laws. Such laws not only protect consumers against defective or faulty goods and services but also protect consumers from unfair business practices and false advertising. AI is often used to provide virtual tours and create pricing algorithms. While these tools can result in cost-savings, construction industry professionals must take care to ensure the AI systems do not make errors, do not discriminate, and accurately represent features and prices. Even unintentional misrepresentations can result in significant liability under consumer protection laws, so smart and educated use of AI is imperative.
Finally, AI can aid the construction industry in performance of safety-critical tasks. But AI also makes errors in decision-making, can be unpredictable, and can malfunction on its own. What happens if an AI-guided forklift collides with an employee due to a sensor error? What if an AI system used in safety monitoring fails to detect a gas leak? Employers could be held responsible if physical injuries stem from improper implementation of the AI system, inadequate training in use of the AI system, or for failure to provide appropriate human oversight. Moreover, while AI can identify means to minimize costs, it could suggest reductions that compromise worker safety, ultimately eliminating any real benefit.
WHAT CAN YOU DO TO PROTECT YOUR BUSINESS?
AI is now a fixture in the modern landscape, and the construction industry is no exception. AI is reshaping how we build, and successful use of the technology must be done in collaboration with legal counsel. In short, just as it is in the industry itself, AI is here to enhance, not altogether replace, construction lawyers. Both the construction and legal industries are built around human accountability, and construction professionals should recognize that AI cannot replace human judgment, especially in complex or safety-critical situations. To harness the advantages of AI while ensuring legal compliance, modern contractors must consider AI-specific clauses in contracts and develop human oversight protocols in training, safety monitoring, and cybersecurity to ensure AI drives value, not legal risk.
about the authors
Christopher S. Drewry is a partner in the Indianapolis office of the law firm of McCarter & English, LLP (www.mccarter.com), where he focuses his practice on construction law and litigation, labor and employment law and litigation, and commercial litigation. Chris is a current member and Past Chair of the Construction Law and Litigation Committee of the International Association of Defense Counsel, and he can be reached at cdrewry@mccarter.com. Kaylin O. Cook is an associate at McCarter & English, where she focuses her practice on business litigation, including construction law and labor and employment law. She can be reached at kcook@mccarter.com.