Legal experts warn UK firms of rising AI risks in 2026 as regulation tightens

"UK businesses are being urged to tighten controls around their use of artificial intelligence in 2026, as legal experts warn that poorly governed AI systems are exposing companies to mounting legal, financial and reputational risks. From unclear ownership of AI-generated content to data protection breaches and misleading outputs, advisers say many organisations have adopted AI tools faster than they have put safeguards in place, leaving them vulnerable as regulation accelerates."

"One of the most pressing risks for businesses using generative AI is uncertainty around copyright and ownership of AI-generated outputs. Legal experts warn that AI tools can unintentionally reproduce copyrighted material, creating disputes over who owns, or is liable for, the content produced. A high-profile example is the case of Getty Images versus Stability AI, which highlighted the legal grey areas surrounding AI training data."

"Getty alleged that its copyrighted images had been used without permission to train an image-generation model. While Getty's main UK copyright claim did not succeed, the court found limited trademark infringement linked to early outputs that reproduced Getty watermarks, underlining the legal uncertainty businesses still face. Lawyers say companies should carefully review the licensing terms of any AI tools they use, implement internal review processes to check outputs for potential infringement, and clearly define ownership rights in contracts."

UK businesses face mounting legal, financial and reputational risks from poorly governed AI as regulation tightens in 2026. Unclear ownership of AI-generated content creates copyright and liability disputes, especially when training data sources are opaque. High-profile litigation highlights grey areas in training data, watermark reproduction and trademark issues. Inaccurate AI outputs, including hallucinations affecting roughly 20% of results, pose misrepresentation risks for legal, financial and operational decisions. Legal advisers recommend reviewing AI licensing, implementing internal output-review processes, and clearly defining ownership and contractual rights for commercial use of generative AI.

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