Hunton Insurance Recovery Blog

Artificial intelligence (AI) is en vogue. As it rapidly reshapes industries, companies are racing to integrate and market AI-driven solutions and products. But how much is too much? Some companies are finding out the hard way.

The legal risks associated with AI, especially those facing corporate leadership, are growing as quickly as the technology itself. As we explained in a recent post, directors and officers risk personal liability, both for disclosing and failing to disclose how their businesses are using AI. Two recent securities class action lawsuits illustrate the risks associated with AI-related misrepresentations, underscoring the need for management to have a clear and accurate understanding of how the business is using AI and the importance of ensuring adequate insurance coverage for AI-related liabilities.

Directors and officers should take note of a recent decision from the US Bankruptcy Court for the Southern District of New York concerning access to D&O insurance policy proceeds.  In In re SVB Financial Group, Case No. 23-10367 (Bankr. S.D.N.Y. May 22, 2023)^[1], the Bankruptcy Court found cause to lift the automatic stay to allow directors and officers to access the proceeds of SVB Financial Group’s (“SVB”) directors and officers (“D&O”) insurance policies to pay for legal costs incurred in responding to investigations and defending litigation.  Moreover, it declined to impose a “soft cap” on the advance of defense costs. 

The American Bar Association published an article, You’ve Come a Long Way Baby, or Have You?, which highlights the results of a new study by Hunton Andrews Kurth LLP attorneys Shannon S. Broome, Lauren Bachtel, and Jennifer MikoLevine, and environmental litigation specialist Richard M. Pavlak, shedding light on whether the environmental bar is achieving gender equality. The authors acknowledge and appreciate the important contributions of the late Richard Pavlak (who passed away unexpectedly shortly before the online version became available) for his graphical presentation of the results of the study.

Hunton insurance coverage attorney Geoffrey Fehling recently presented on new developments in the area of D&O liability insurance at the Director and Officer Liability Committee’s spring meeting, which concluded a week of programming, networking, and other events at the 2021 ABA Business Law Virtual Spring Meeting. The mission of the Committee on Director and Officer Liability is to monitor developments concerning the liability of directors and officers of for-profit corporations, including court decisions, government actions, D&O insurance, and indemnification and ...