Observations · AI and Business Since 2022
Legal
GPT-4 passing the bar exam in early 2023 made law the symbol of white-collar exposure. Contract review, research, and drafting compressed from days to hours — while early hallucinated-citation scandals taught the profession exactly where the limits were.
What drove it
GPT-4 and Claude's long-context document analysis (hundred-page contracts in one prompt), Harvey and CoCounsel built on frontier APIs, and retrieval systems over firm precedent.
The evolution
2023
GPT-4 passing the bar made law the emblem of white-collar exposure; the EU agreed the AI Act and Washington issued the first binding AI order.
- Meta's LLaMA weights leak — open-source AI ignites
It ignited the open-source LLM ecosystem — Alpaca, Vicuna, llama.cpp — and the defining open-versus-closed debate of the era.
- GPT-4: AI passes the bar exam
GPT-4 reset expectations of what AI could do in professional domains — law, medicine, finance, coding — and became the benchmark every rival measured against for over a year.
- Anthropic launches Claude; Claude 2 goes public in July
It established a credible safety-focused rival to OpenAI and made long-context document processing a competitive differentiator.
- 30,000 signatures call for a pause on giant AI experiments
It moved AI risk from academic circles to front pages and boardrooms, framing frontier AI as a societal decision rather than a purely commercial one.
- Biden signs the sweeping AI executive order
The US government's first binding intervention in frontier AI development, setting compute-threshold reporting before any legislation existed.
- 28 nations — including the US and China — sign the Bletchley Declaration
It established 'frontier AI' as a category of international governance and launched the AI Safety Institute model.
- Hollywood's AI reckoning: SAG-AFTRA wins digital-replica protections
The first large-scale collective-bargaining settlement over generative AI — consent-and-compensation became the template for AI and human labor.
- EU agrees the AI Act — the world's first comprehensive AI law
It set the global regulatory benchmark for AI — the 'Brussels effect' — and covered frontier model providers for the first time anywhere.
2024
The AI Act entered into force, California passed and vetoed SB 1047, and licensing deals began setting market rates for training data while copyright suits multiplied.
- Gemini 1.5 brings the 1M-token context window
Long context reset expectations for how much information one model could reason over; the image controversy became the year's cautionary tale on guardrail tuning.
- Media's fork in the road: News Corp licenses, others litigate
The media industry split into two strategies — litigate or license — while AI answers began replacing clicks.
- Claude 3.5 Sonnet and Artifacts: better, faster, cheaper — with a workspace
Proof of how fast price-performance was improving, and a new interaction model built around producing real work rather than chat.
- The EU AI Act enters into force
The first binding global template for regulating AI by risk category.
- California passes — then vetoes — frontier AI safety bill SB 1047
The highest-profile US state attempt to regulate frontier AI, and a preview of the federal–state tension that followed.
2025
Washington pivoted to deregulation with the AI Action Plan while contract review and research compressed from days to hours.
- Washington's AI Action Plan — and the H20 chip whiplash
US policy pivoted to deregulation and export promotion, making chip access an explicit instrument of trade negotiation.
- OpenAI completes its for-profit restructuring; Microsoft takes 27%
It resolved the year's most consequential governance fight and removed the constraints that had bound OpenAI's capital raising since 2019.
2026
The Digital Omnibus delayed high-risk rules by 16+ months while GPAI enforcement began August 2026 — and a frontier lab itself, Anthropic, called for government authority to gate unsafe model releases, moving the governance debate inside the industry.
- New Jersey codifies the ABC test as the federal rule stalls
Classification is where the promise of frictionless global hiring meets the ground. A three-prong conjunctive test decided state by state is not a protocol; it is twenty-odd incompatible dialects with the same name. The compliance floor for anyone paying contractors in the US is set here, in state rulemaking, not in a single federal standard.
- Germany starts drafting as the EU platform work deadline nears
The directive was supposed to harmonise platform work across Europe, and in the most important respect it does the opposite: the employment presumption is delegated to twenty-seven national legislatures, each defining its own triggers. A protocol that every implementer configures differently is a standard in name only — and the algorithmic-management provisions arrive on top, reaching further into automated decisions than the AI Act does.
- EU delays AI Act high-risk rules in the Digital Omnibus deal
A pragmatic admission that the oversight infrastructure wasn't ready — the world's most ambitious AI law recalibrated under simplification pressure.
- Anthropic publishes an economic policy framework for AI displacement
A market-leading developer is formally proposing to be taxed to fund — and to have its releases gated by — the disruption its own products may cause. Read the incentives: the disruptor is moving first to shape the rules of its own disruption.
- The OCC proposes the compliance perimeter for stablecoin issuers
This is the boring half of the stablecoin story and the half that decides whether regulated businesses can actually use these rails. Nothing about a payout channel matters operationally until an issuer sits inside a supervised AML, sanctions and reporting regime. Compliance is not a tax on the product here — it is the feature that makes the product usable by anyone with a real balance sheet.
Key sources
The papers, announcements, and reports that document this industry's shift. Each also lives in the Library.
What businesses do differently
Firms adopted AI for first drafts and review with verification workflows; clients began questioning billable hours for work AI accelerates. In-house teams insource more routine work.
What this means for founders and leaders
Legal AI rewards domain-deep products with verification built in. For everyone else: AI-accelerated legal review is cutting transaction friction — contracts, compliance, fundraising — faster than most founders realize.