5th November 2026
Last year, a company I worked with got close to outsourcing a six-figure software build to a small, specialist development team. The discovery calls went well, and a free half-day workshop pinned down the scope. Then the engagement letter arrived, and we were all a little flabbergasted.
It was long and strongly worded, and it made questionable demands on IP. The stakes justified bringing in a law firm for a second opinion, but we already had a suspicion about what was going on. The letter read as if a general-purpose AI model had written it, with no expert oversight and no grasp of the context. Either that, or a poor-quality adviser had pulled out a boilerplate contract that didn’t fit.
We sent back a diplomatic response. The contractor doubled down with even harder legal positions, and the structure and language of their reply pointed the same way.
I liked the team and wanted to give them a way back. We set up a one-to-one between the two founders, our CEO and theirs, to stress the importance of getting proper advice. They still didn’t read the room. They saw no need to pay for legal advice, and said the positions the AI had given them were perfectly reasonable.
That cost them the work. We had lost confidence in the relationship, and we ended the discussions.
The lesson isn’t that AI is dangerous. It’s knowing when to put AI down and go to an expert. Keeping a human in the loop on high-value work is essential. But it has to be the right human, one qualified for the task in hand.
Why this matters now
If your firm has started using AI, it is probably already shaping your workflows and what you deliver to clients. That raises questions about UK GDPR and your wider regulatory commitments. Do your client contracts need updating? Could the new tools put you in breach of your supplier agreements? The questions stack up quickly.
Lawyers who properly understand software, data and AI are hard to find. Much of the legislation and case law around AI is still forming. But there are sensible positions you can take now to protect yourself. That’s why Pathmaker has partnered with SGM Law.
Pathmaker is an AI advisory. We lead your AI strategy, adoption and build work, but we are not solicitors. When a question needs a robust legal position, a search result or an AI-generated answer is where you start, not where you stop.
Five signs you need legal advice sooner rather than later
You’re introducing AI into client-facing services.
Client data is being used in AI workflows.
Suppliers are building AI into what they deliver to you.
Investors, your regulator or your PI insurer are asking governance questions.
Your client contracts and engagement letters pre-date your AI adoption.
If any of these apply, book a 30-minute call with me. We’ll scope the question together, then bring in the team at SGM Law.
