Summary

Article Overview: This article addresses the urgent challenge facing in-house counsel in navigating rapidly evolving AI regulations, with particular focus on Illinois laws including the Illinois Artificial Intelligence Video Interview Act (820 ILCS 42), which requires employers to notify applicants and obtain consent when AI analyzes video interviews, with violations potentially resulting in significant penalties. The piece outlines a step-by-step compliance action plan and warns against common mistakes, such as assuming vendor compliance satisfies an organization's own legal obligations—a critical point illustrated by a staffing company that paid $125,000 in settlements despite their vendor's compliance assurances.

How to Navigate Keeping Pace: How In-House Counsel Can Stay Ahead Of Rapidly Changing AI Laws: Your Ultimate Protection Guide

What You Need to Know About Keeping Pace: How In-House Counsel Can Stay Ahead Of Rapidly Changing AI Laws

Last Tuesday, a general counsel at a Chicago staffing firm received devastating news. A cease-and-desist letter arrived from the Illinois Attorney General's office. The violation? Their AI-powered hiring software had screened candidates for six months. The company never provided disclosures required under the Illinois Artificial Intelligence Video Interview Act. Potential penalties exceeded $75,000. The legal team had no idea the law applied to them.

This scenario repeats across Illinois with alarming frequency. Keeping pace: how in-house counsel can stay ahead of rapidly changing AI laws now ranks among the most urgent challenges facing legal departments. Family law firms, corporate legal teams, and every organization using AI tools must confront this reality.

Illinois Law on Keeping Pace: How In-House Counsel Can Stay Ahead Of Rapidly Changing AI Laws: The Basics

Illinois leads the nation in AI regulation. This creates both opportunities and compliance burdens for in-house counsel. Understanding the foundational statutes is essential:

• Illinois Artificial Intelligence Video Interview Act (820 ILCS 42): Employers must notify applicants when AI analyzes video interviews. They must explain how the AI works. They must obtain consent before recording. Plain English: Tell job candidates if a robot judges their interview. Get their permission first.
• Biometric Information Privacy Act (740 ILCS 14): This law governs biometric data collection. Many AI systems use facial recognition covered by BIPA. Violations carry penalties of $1,000-$5,000 per incident. Plain English: If your AI scans faces or fingerprints, get written consent. Otherwise, expect massive liability.
• Illinois Human Rights Act Amendments (775 ILCS 5): Starting January 2026, employers using AI for employment decisions face new requirements. They must provide notice. They must ensure systems don't discriminate. Plain English: Your hiring AI can't be biased. You must prove it isn't.

2024-2025 Update: Governor Pritzker signed amendments expanding BIPA's scope. The law now covers AI training data derived from Illinois residents. Companies using facial recognition datasets face new consent requirements. These take effect July 2025.

The Regulatory Landscape in Constant Motion

The AI regulatory environment shifts weekly. The EU AI Act introduces new requirements. State legislatures across America pass competing laws. Executive orders reshape federal priorities. Sector-specific guidance adds another layer.

In-house counsel must navigate this fragmented, fast-moving landscape. What was permissible last month may require disclosure tomorrow. It might require assessment next week. It could face outright prohibition next quarter.

Key Challenges Facing In-House Legal Teams

Volume and Velocity of New Requirements

New AI-related laws emerge weekly across multiple jurisdictions. The numbers tell the story clearly. In 2024 alone, 45 states introduced AI-related bills. Seventeen states enacted new laws. Tracking these developments consumes enormous resources. Managing day-to-day operations simultaneously strains even well-resourced teams.

Technical Complexity Creates Knowledge Gaps

Effective AI governance demands more than legal knowledge. Counsel must understand how AI systems function. They must identify where risks arise. They must grasp how technical teams make development decisions.

Consider this cautionary tale. A Cook County family law firm deployed an AI tool to predict custody outcomes. Their legal team missed a critical flaw. The system used protected characteristics in its analysis. They discovered this only when opposing counsel raised algorithmic bias in a motion.

Cross-Functional Coordination Demands

AI touches nearly every business function. HR uses it for hiring. Marketing uses it for targeting. Product teams use it for development. Client services use it for support. Counsel must collaborate across silos that traditionally operated independently.

Real Cases: How This Plays Out in Cook County Courts

Case Example #1: The Hidden Algorithm

A DuPage County family law practice used AI software for a sensitive purpose. The tool assessed parental fitness based on social media analysis. Opposing counsel discovered the tool. They filed a motion challenging its admissibility.

Legal issue: Whether AI-generated assessments constitute expert testimony requiring foundation.

Outcome: The judge excluded the evidence. The firm received $12,500 in sanctions for failing to disclose methodology. The custody arrangement shifted significantly as a result.

Case Example #2: The Disclosure Failure

A Chicago employer used AI chatbots for initial screening interviews. They hired paralegals through this system. They never provided disclosures required under 820 ILCS 42.

Legal issue: Violation of the Illinois AI Video Interview Act.

Outcome: The company paid $85,000 to settle with affected applicants. Implementing a comprehensive compliance program cost an additional $40,000. Total impact: $125,000.

Case Example #3: The Biometric Breach

A family law firm's client intake system used facial recognition. The purpose seemed reasonable: verify identity. The problem: no BIPA consent was obtained.

Legal issue: Collection of biometric identifiers without informed written consent.

Outcome: Class action exposure reached an estimated $2.3 million. The calculation: 460 affected individuals at $5,000 per violation.

Your Step-by-Step Action Plan

1. Immediate action: Conduct a complete inventory of every AI tool your organization uses. Include third-party software with AI features you may have overlooked. Document what data each tool collects and processes.
2. Within 48 hours: Review all vendor contracts for AI-related provisions. Flag agreements lacking indemnification for regulatory violations. Identify contracts missing audit rights for algorithmic bias testing.
3. Within one week: Establish a regulatory monitoring system. Subscribe to alerts from the Illinois Attorney General, EEOC, and FTC. Add relevant sector regulators. Assign specific team members to track each source.
4. Within 30 days: Develop or update your AI governance policy. Include disclosure requirements. Add consent protocols. Create escalation procedures for new AI deployments.
5. Before your next court date: Audit any AI tools used in case preparation or evidence analysis. Prepare foundation documentation for any AI-generated work product you plan to introduce.

Building a Monitoring Infrastructure That Works

• Subscribe to regulatory alerts from key jurisdictions. Prioritize the EU, federal agencies, Illinois, and states where clients operate.
• Leverage AI-focused legal newsletters from firms specializing in technology regulation.
• Designate specific team members to track particular regulatory bodies or geographic regions.
• Create internal dashboards aggregating developments by risk level and business impact.
• Schedule monthly review meetings. Assess new requirements against current practices.

Developing Regulatory Relationships

• Participate in public comment periods. You'll gain early insight into regulatory thinking. Illinois agencies often signal enforcement priorities months before acting.
• Join industry associations engaged in AI policy advocacy.
• Attend regulator-hosted workshops and listening sessions.
• Build relationships with outside counsel who specialize in AI governance.

Creating Adaptive Compliance Frameworks

Don't build compliance programs around specific current requirements. Instead, develop flexible frameworks that accommodate change:

• Risk-based assessment protocols that incorporate new risk categories as they emerge
• Documentation practices robust enough to satisfy evolving transparency requirements
• Vendor management processes with contractual provisions allowing regulatory updates
• Modular policies that update incrementally rather than requiring complete overhauls

Common Mistakes That Cost Clients Their Case

• Mistake #1: Assuming vendor compliance equals your compliance. Why it matters: Illinois law places primary responsibility on the deploying organization. The software vendor bears secondary liability at best. A staffing company learned this lesson the hard way. They paid $125,000 in settlements despite their vendor's assurances of "full compliance."
• Mistake #2: Failing to document AI decision-making processes. Why it matters: Opposing counsel will challenge AI-generated evidence. Courts require foundation showing system reliability. Without contemporaneous documentation, you cannot establish admissibility. You may also face sanctions for discovery failures.
• Mistake #3: Treating AI governance as a one-time project. Why it matters: Regulations change quarterly. A policy written in January 2024 may create liability by December 2024. Continuous monitoring isn't optional. It represents the minimum standard of care.
• Mistake #4: Excluding technical teams from legal discussions. Why it matters: Engineers and data scientists spot compliance risks that legal teams miss. One firm avoided a $50,000 penalty because a developer raised a concern. Their "anonymized" data could be re-identified. That's a BIPA violation waiting to happen.

Cybersecurity Considerations for Keeping Pace: How In-House Counsel Can Stay Ahead Of Rapidly Changing AI Laws

AI systems create unique cybersecurity vulnerabilities. These intersect directly with family law practice. During custody disputes, text messages become critical evidence. Emails require preservation. Digital communications need protection from unauthorized access.

AI tools analyzing this data may store copies in cloud environments. Each copy creates an additional exposure point.

Consider these protective measures:

• Verify where AI vendors store and process client data. Many route information through servers outside the United States.
• Implement access controls. Limit which team members can input sensitive case information into AI systems.
• Establish data retention policies for AI-processed materials. Ensure compliance with Illinois Supreme Court Rules on evidence preservation.
• Conduct security assessments before deploying any AI tool. Focus on encryption standards and breach notification procedures.

Priority Areas Demanding Immediate Attention

Employment and HR Applications

Automated hiring tools face increasing regulation. Illinois imposes strict requirements. Colorado has enacted similar laws. New York City mandates bias audits. Other jurisdictions add disclosure and impact assessment requirements.

Illinois employers using AI in any hiring decision must comply with multiple overlapping statutes.

Consumer Protection Enforcement

References

• Illinois General Assembly. (2023). Illinois Artificial Intelligence Video Interview Act (820 ILCS 42). Retrieved from https://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=3681&ChapterID=83
• Illinois General Assembly. (2023). Biometric Information Privacy Act (740 ILCS 14). Retrieved from https://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2459&ChapterID=68
• Illinois Department of Human Rights. (2023). Illinois Human Rights Act. Retrieved from https://www.illinois.gov/dhr/Pages/Illinois_Human_Rights_Act.aspx
• European Commission. (2023). Proposal for a Regulation laying down harmonised rules on artificial intelligence (AI Act). Retrieved from https://ec.europa.eu/commission/presscorner/detail/en/ip_22_561

For more insights, read our Divorce Decoded blog.