Building an AI Governance Policy for Your North Carolina Firm
An AI governance policy is no longer optional for North Carolina firms of any size. This framework addresses approved tools, data handling, supervision obligations, billing ethics, and client disclosure.
The North Carolina State Bar's Technology and Practice Innovation Committee has identified AI governance as one of the most pressing practice management issues facing the bar. While formal rulemaking has not yet occurred, the committee's guidance documents and the ABA's Formal Opinion 512 together establish a clear expectation: firms that use AI without written policies are operating below the standard of care.
Core Components of an AI Governance Policy
An effective policy addresses six areas: (1) Approved and prohibited tools, with a clear approval process for new platforms; (2) Data classification rules -- what client information, if any, may be entered into AI systems; (3) Verification requirements before any AI output is used in client work or court filings; (4) Supervision structure for associates and staff AI use; (5) Billing ethics -- when AI efficiency savings must be passed to clients; and (6) Client disclosure standards.
The Billing Ethics Question
Rule 1.5 requires that fees be reasonable. When AI tools reduce the time required for a task that would previously have been billed hourly, the economics require analysis. If a research task that took an associate four hours now takes thirty minutes with AI assistance, billing the full four hours is arguably unreasonable. Firms should develop transparent billing policies for AI-assisted work before the issue arises in a fee dispute.