As in other industries, creative agencies are increasingly turning to materials generated by artificial intelligence (AI) to enhance their work for clients. While AI presents opportunities to streamline and reduce client costs, current iterations come with some legal and risks that creative agencies need to be aware of.

Benefits of AI for Creative Agencies

While still in its relative infancy, many creative agencies have already begun leveraging the capabilities of various AI platforms. Whether code generation,illustration, copywriting, data analysis, or other applications, creative agencies see opportunities for AI. 

AI tools allow agencies to reduce the time to complete mundane tasks allowing creatives to focus on more high-level and strategic work. That reduced time can also translate into lower costs. This can allow the agency to offer a more competitive price, or, better yet, some agencies may be able to capture more value in how they leverage AI to benefit their clients. Just like any other tool, agencies that use AI effectively can deliver more value (and collect higher fees) for doing so.

Legal Issues for Agencies Using AI

As agencies explore the benefits of incorporating AI into their workflows, it’s important to understand the risks involved and to develop processes to safeguard your agency.

The key legal issue is that AI-generated materials may be the result of copyright infringement. There is litigation currently underway in a number of areas where original creators are arguing that the materials used by AI are being used without permission. And that by using another author’s materials to generate something new, some argue that AI is violating the original author’s copyright

This creates two problems.

First, a client might fairly not want to include materials with this type of risk into its deliverables. Maybe they are risk averse or maybe they feel that using this type of work wouldn’t survive due diligence in a code audit. If the litigation concludes that the AI process is infringing copyright, what happens to all that AI-generated work included in client deliverables? Will it need to be removed? Will the original authors come after agencies or their clients for using those materials? No one knows the answers to these questions yet. 

Second, most agencies have to promise in their MSAs that deliverables do not infringe third-party copyrights. Until the AI litigation is resolved, without some adjustment to the MSA, the agency would be taking on the risk of how the ongoing litigation will be resolved. Certainly the agency may choose to take this risk on for the client, but given the uncertainty and stakes involved, it should be paid more for doing so. And have clear expectations with the client about what will happen if the litigation is resolved in a manner that creates legal questions about any AI work included in the deliverables.

How Should Your Agency Approach AI in its Creative Work?

Until the litigation is resolved and industry standards become clearer, we recommend creative do the following:

When you are kicking around ballpark prices (pre-SOW) in a project where you plan to use AI, you should let the client know that your price assumes that AI will be used. That way, if the client later decides to exclude AI materials from deliverables, they won’t be surprised when the price goes up. 

Further, your client should affirmatively consent to the use of AI materials in deliverables. In asking for consent, the agency should explain that the legal status of AI-generated materials is uncertain. If the client chooses to include AI-generated materials in deliverables, the agency must modify the MSA warranty and indemnity regarding infringement so as to not apply to AI materials. 

Essentially, AI materials are provided without warranty.

This general approach may need to be tweaked depending on if your agency delivers code, design, strategy, copywriting or any combination of these materials. Also, the way your MSA is modified will depend a lot on how it is written. Don’t assume that the language a friend’s agency used or that you read online can be plopped directly into your services agreement. How your agency uses AI is unique and likely will need a custom approach in your contract.

Opportunities and Risks

Until the ongoing litigation around AI is resolved, agencies should approach using it with some caution. While AI certainly provides opportunities for efficiency and capturing more value, clients should affirmatively consent to use of AI-generated materials in their deliverables. And when they do so, agencies should consult with their lawyer about how to modify the MSA necessary to ensure that the agency does not take on excess risk.