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Welcome to this week's edition of The Legal Wire!

In Australia, a government report laced with AI-fabricated footnotes just cost Deloitte a refund. The cautionary tale lands as California signs SB 53, forcing major AI firms to publish safety plans, report incidents, protect whistleblowers, and stand up CalCompute, nudging global norms toward transparency over vibes.

Meanwhile, OpenAI’s “Hacktivate AI” playbook urges Europe to move from ambition to adoption (worker learning accounts, SME champion networks, a GovAI hub), while in the UK, law professor Andres Guadamuz argues creatives should back domestic training reform so compensation flows at home instead of offshore. In the market, Harvey’s CEO says a $5B run demands unglamorous discipline, calendar audits, hands-on first hires, and empowering juniors, over pure model worship.

If AI is the engine, contracting is the gearbox. Don’t miss our Q&A with Darryl Chiang on using AI to standardize the 80% of clauses everyone negotiates endlessly, so lawyers can spend judgment on the 20% that matter. Then join us at Legal Innovators New York (Nov 19–20, Latham & Watkins NYC) to go deeper, 500+ peers, practical playbooks for 2026.

This week’s Highlights:

• Industry News and Updates

• Empire State of Contracts: The Future of AI-Driven Innovation with Darryl Chiang

• AI Regulation Updates

• AI Tools to Supercharge your productivity

• Legal prompt of the week

• Latest AI Incidents & Legal Tech Map

➡️ Deloitte to Refund Government Over AI-Generated Errors | Deloitte will repay part of a $440,000 contract after admitting it used AI tools to help write a report for Australia’s Department of Employment and Workplace Relations that contained fabricated references. The firm later confirmed using OpenAI’s GPT-4o, saying the mistakes didn’t affect the report’s findings. Labor Senator Deborah O’Neill criticized Deloitte, saying it has “a human intelligence problem.” The department accepted the refund and said only footnotes, not conclusions, were corrected.
^{Oct 6, 2025, Source: The Guardian}

➡️ Harvey CEO Reveals 2 Habits Behind $5B Legal AI Growth | Harvey CEO Winston Weinberg credits calendar audits and hands-on hiring for helping the $5 billion legal AI startup double revenue every six months. Weinberg said he constantly reviews how he spends his time to focus on “recruiting, product, and customers,” aiming to “automate myself away” from daily operations. He personally oversees early hires in every new office(including Harvey’s new Sydney hub) believing first hires “set the culture.” Harvey’s edge, he said, comes from empowering young talent with major responsibility early on.
^{Oct 6, 2025, Source: Business Insider}

➡️ OpenAI Pushes for Faster AI Adoption in Europe | OpenAI and Allied for Startups have launched Hacktivate AI, a report with 20 proposals to speed up AI adoption across Europe ahead of the EU’s Apply AI Strategy. The ideas, developed with policymakers and startups, include an AI Learning Account for workers, an AI Champions Network for SMEs, and a European GovAI Hub for the public sector. OpenAI’s Martin Signoux said the goal is to close “the gap between Europe’s AI ambition and reality” and turn policy into action that helps businesses and citizens benefit from AI.
^{Oct 6, 2025, Source: OpenAI}

➡️ UK Creatives Should Back AI Training Reform, Says Law Professor | Dr. Andres Guadamuz of the University of Sussex says UK artists should support legal reform to allow AI training at home, arguing it would give them control and compensation instead of leaving their work exploited abroad. Current copyright rules block domestic training, pushing companies overseas and denying authors recourse. Guadamuz points to EU and Japan frameworks that balance AI growth with opt-out rights for creators. “At the moment, their works are being used without any practical recourse,” he warned, urging UK creatives to embrace reform as a path to fair pay.
^{Oct 2, 2025, Source: TechRepublic}

➡️ California Passes Landmark AI Safety Law | Governor Gavin Newsom has signed SB 53, requiring major AI companies like OpenAI, Meta, and Anthropic to disclose safety plans, report incidents, and protect whistleblowers. The law also establishes CalCompute, a state-backed AI research hub. Senator Scott Wiener’s bill emphasizes transparency, not liability. Supporters say it balances innovation and safety, while critics warn it could burden startups. With most top AI firms based in California, the law is expected to influence global AI regulation.
^{Sep 30, 2025, Source: Fortune}

Legal Technology

Empire State of Contracts: The Future of AI-Driven Innovation with Darryl Chiang

As in-house counsels face the growing impact of AI on contracting, the challenge is not just to move faster but to work with greater purpose and precision. In this exclusive Q&A, Darryl Chiang offers a preview of the key themes he will explore: why standardization is essential, how to simplify complex workflows, and where AI can deliver real strategic value.

On November 20th, Darryl will join the ‘Smarter Contracts: AI-Driven Review and Contracting Innovation’ panel on our In-House Day to continue the conversation, helping legal teams move beyond the AI buzz and toward practical, scalable adoption. 

Contracts are at the heart of business—how do you see the way we handle them changing right now?

Currently, AI offers a powerful, yet false sense of efficiency by helping us churn through needlessly bespoke, complex contracts. While it’s tempting to use AI to simply do more of what we’ve always done, the real game changer is to use AI to standardize and harmonize 80% of our contract clauses. If we use AI’s unprecedented analytics capabilities to confirm that 80% of contract clauses are actually saying the same thing (using an infinite number of needlessly different formulations), and if we ask AI to help draft standardized, open-source template clauses instead–the way oneNDA and BonTerms have already started to do–we can move away from having AI bots engage in a wasteful “battle of the forms” to harnessing AI to build a shared foundation of standard terms so that humans can focus on negotiating the 20% of contract clauses that are truly novel or material.

Click here to continue reading the full interview

The AI Regulation Tracker offers a clickable global map that gives you instant snapshots of how each country is handling AI laws, along with the most recent policy developments.

The most recent developments from the past week:

📋 3 October 2025 | EU Commission President urges European push on AI-driven cars: It is reported that, at the Italian Tech Week in Turin (Italy's automative hub), European Commission President Ursula von der Leyen called for a continent-wide push to develop self-driving cars, saying AI could help revive the region's struggling automotive sector and improve road safety. President von der Leyen urged the EU to adopt an "AI first" strategy across strategic industries, with a focus on mobility, and proposed forming a network of European cities to pilot autonomous vehicles, saying 60 Italian mayors had already expressed interest.

📋 2 October 2025 | South Korea FTC leveraging AI to prevent unfair subcontracting and establishing a fair trade support platform: South Korea's Fair Trade Commission (FTC) has announced its plans to launch an AI-powered platform by late 2026 to detect and prevent unfair subcontracting practices, aiming to protect startups and SMEs in partnerships with larger enterprises. This initiative, backed by a KRW 1.8 billion budget, will automate the analysis, drafting, and review of subcontracting contracts, helping identify unfair clauses before agreements are signed. The system will also streamline the FTC's internal processes for reviewing penalty reduction requests, reducing administrative delays that previously discouraged SMEs from filing complaints. By integrating generative AI and machine learning, the platform seeks to create fair contract drafts, benchmark past rulings, and flag potentially unlawful terms, thereby fostering a more transparent and equitable business environment for smaller companies.

📋 1 October 2025 | President Lee signals possible regulatory easing to boost AI investment: According to the presidential office's press briefing, President Lee Jae Myung has called for reviews to ease strict regulations on cross-ownership between financial and industrial firms to support large-scale investments, particularly after meeting with OpenAI CEO Sam Altman regarding the need for "astronomical" investment by companies like Samsung Electronics and SK hynix for new semiconductor plants to meet soaring AI demand. President Lee's directive to explore these regulatory adjustments was caveated with a strong emphasis on maintaining safeguards to prevent monopolistic abuses and keeping the easing confined to strategic sectors. Furthermore, President Lee highlighted an envisioned 150 trillion won (US$110 billion) public-private fund launching in December 2025 as a potential source for joint investment in these major projects.

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The Responsible AI Collaborative is a not‑for‑profit organization working to present real‑world AI harms through its Artificial Intelligence Incident Database.

View the latest reported incidents below:

⚠️ 2022-08-10 | CFPB Reportedly Finds Hello Digit's Automated Savings Algorithm Caused Overdrafts and Orders Redress with $2.7M Penalty | View Incident

⚠️ 2025-09-29 | Donald Trump Reportedly Posts Purported AI-Modified Video of Chuck Schumer and Hakeem Jeffries During U.S. Government Shutdown Talks | View Incident

⚠️ 2025-08-01 | Gaggle AI Monitoring at Lawrence, Kansas High School Reportedly Misflags Student Content and Blocks Emails | View Incident

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