{"id":134720,"date":"2025-10-07T10:02:12","date_gmt":"2025-10-07T18:02:12","guid":{"rendered":"https:\/\/xira.com\/p\/2025\/10\/07\/the-ai-arbitrator-is-here-whats-next\/"},"modified":"2025-10-07T10:02:12","modified_gmt":"2025-10-07T18:02:12","slug":"the-ai-arbitrator-is-here-whats-next","status":"publish","type":"post","link":"https:\/\/xira.com\/p\/2025\/10\/07\/the-ai-arbitrator-is-here-whats-next\/","title":{"rendered":"The AI Arbitrator Is Here: What\u2019s Next?"},"content":{"rendered":"<p>When the\u00a0<a href=\"https:\/\/www.google.com\/url?sa=t&amp;source=web&amp;rct=j&amp;opi=89978449&amp;url=https:\/\/www.adr.org\/&amp;ved=2ahUKEwiF-fTtlIGQAxU25MkDHXyhJEMQFnoECA8QAQ&amp;usg=AOvVaw3Zi6i9oxRl0UYAgreEZ9Ly\" rel=\"nofollow noopener\" target=\"_blank\">American Arbitration Association<\/a>\u00a0(AAA) recently\u00a0<a href=\"https:\/\/www.adr.org\/press-releases\/aaa-icdr-to-launch-ai-native-arbitrator-transforming-dispute-resolution\/\" rel=\"nofollow noopener\" target=\"_blank\">announced<\/a>\u00a0that it would be launching\u00a0an AI-powered arbitrator in November, it\u00a0raised\u00a0the question\u00a0of the future\u00a0role of AI\u00a0in litigation.\u00a0Indeed, it could\u00a0suggest a possible future\u00a0that\u00a0many litigators\u00a0still\u00a0insist will never arrive.<\/p>\n<p>I\u00a0often\u00a0give presentations\u00a0on the\u00a0use of AI in litigation and the impact it could and will have. I\u00a0frequently\u00a0hear from older\u00a0litigators\u00a0that they\u00a0aren\u2019t\u00a0all that\u00a0concerned about\u00a0what AI could\u00a0do\u00a0to their practices. After\u00a0all, they reason,\u00a0litigators have to\u00a0effectively\u00a0persuade other humans. They\u00a0need to\u00a0have\u00a0empathy, sympathy,\u00a0and\u00a0assess\u00a0body\u00a0language\u00a0and\u00a0subtleties\u00a0in others. And they have to have\u00a0the proverbial gut\u00a0instinct. None of these things does\u00a0AI have.\u00a0Yet.<\/p>\n<p>That may be true,\u00a0I say. But\u00a0have\u00a0you\u00a0considered the\u00a0possibility that, in the future,\u00a0the decision maker is,\u00a0itself,\u00a0an AI\u00a0tool?\u00a0How necessary will litigators be when all the relevant information is fed into a bot which then makes a decision? What will the litigator\u2019s job be?\u00a0How realistic is this?<\/p>\n<p><strong>The AAA Announcement<\/strong><\/p>\n<p>And lest we think that AI decision\u00a0making is\u00a0far-fetched,\u00a0eBay has been using an AI bot to\u00a0resolve\u00a0disputes between buyers\u00a0and sellers for some time.\u00a0Then came the AAA\u00a0announcement that it would\u00a0be launching\u00a0its\u00a0AI-powered arbitrator in\u00a0November. The\u00a0AI\u00a0arbitrator will, for now, be deciding\u00a0documents-only construction defect\u00a0cases, although in the future,\u00a0according to AAA,\u00a0it\u00a0may\u00a0be\u00a0used for\u00a0insurance\u00a0cases and\u00a0specifically\u00a0high-volume but low-dollar-amount\u00a0payer provider disputes.\u00a0<\/p>\n<p>In an interview on\u00a0<a href=\"https:\/\/lawnext.libsyn.com\/\" rel=\"nofollow noopener\" target=\"_blank\">Bob Ambrogi\u2019s\u00a0podcast<\/a>,\u00a0Bridget\u00a0McCormack, AAA\u2019s\u00a0president and CEO,\u00a0claimed that use of the tool\u00a0would reduce the cost of\u00a0construction\u00a0cases\u00a0by some 30-50% and\u00a0the time\u00a0required to\u00a0litigate and\u00a0resolve\u00a0a case by\u00a025-35%. She expects\u00a0improvement\u00a0over time.<\/p>\n<p><strong>It\u2019s All About Cost\u00a0<\/strong><strong>v.\u00a0<\/strong><strong>Exposure<\/strong><\/p>\n<p>It\u2019s those metrics that stand out.\u00a0Particularly\u00a0for\u00a0arbitration\u00a0but\u00a0for all\u00a0litigation, cost and time are\u00a0critical. Lots of\u00a0disputes go\u00a0unresolved\u00a0because\u00a0of these two factors. And\u00a0businesses\u00a0and\u00a0insurance\u00a0companies\u00a0would\u00a0tell you that\u00a0the transactional\u00a0costs of litigation\u00a0are\u00a0substantial.\u00a0<\/p>\n<p>In thinking about whether AI decision making in litigation is realistic, think about the following:\u00a0I\u00a0was talking to a general counsel recently about AI and its impact. I\u00a0asked\u00a0her\u00a0if\u00a0she were given the option of having an AI tool decide a case\u00a0without\u00a0so much cost\u00a0would\u00a0she agree? Her answer, even\u00a0a few months ago,\u00a0was\u00a0\u201cAbsolutely.\u00a0If\u00a0I could refer\u00a0any case where the amount\u00a0at stake\u00a0was less than, say,\u00a0$50k,\u00a0I would\u00a0do it in a\u00a0heartbeat.\u201d<\/p>\n<p>Why?\u00a0It\u2019s\u00a0because she was\u00a0spending\u00a0more in legal fees\u00a0and transactional costs for those low\u00a0exposure\u00a0cases than what they were worth.\u00a0So even if the AI\u00a0bot\u00a0might get\u00a0a few cases wrong or\u00a0achieve a\u00a0result\u00a0worse\u00a0than\u00a0what\u00a0a human lawyer\u00a0might achieve, it doesn\u2019t\u00a0matter all that much in the\u00a0long run. It\u2019s why insurance companies\u00a0are willing to pay\u00a0lawyers with low hourly\u00a0rates: the difference between\u00a0an A job and\u00a0a C job\u00a0doesn\u2019t affect the overall\u00a0result\u00a0that much.\u00a0So why pay any more\u00a0in legal fees than you have to?<\/p>\n<p><strong>Cases Ripe for AI Decision Making<\/strong><\/p>\n<p>If that\u2019s the case,\u00a0there are\u00a0certain kinds of cases\u00a0that might be ideal for this kind of decision making.<\/p>\n<p>I talked recently with\u00a0<a href=\"https:\/\/www.google.com\/url?sa=t&amp;source=web&amp;rct=j&amp;opi=89978449&amp;url=https:\/\/www.linkedin.com\/in\/sarannah-mcmurtry-3897b347&amp;ved=2ahUKEwixop-oqIGQAxWr4MkDHfMbJycQFnoECAsQAQ&amp;usg=AOvVaw3ovf_b6TH48lOFR55IwXzd\" rel=\"nofollow noopener\" target=\"_blank\">Sarannah McMurtry<\/a>, Executive Vice President and General Counsel of\u00a0<a href=\"https:\/\/www.google.com\/url?sa=t&amp;source=web&amp;rct=j&amp;opi=89978449&amp;url=https:\/\/www.firstacceptance.com\/&amp;ved=2ahUKEwiC7de2qIGQAxUb6ckDHeAvOk0QFnoECBwQAQ&amp;usg=AOvVaw1juzElSp1kyLb8ImdtqGGh\" rel=\"nofollow noopener\" target=\"_blank\">First\u00a0Acceptance Insurance Company<\/a>.\u00a0First Acceptance Insurance Company provides nonstandard auto\u00a0insurance and\u00a0specializes in coverage for high-risk drivers who may not qualify for traditional policies.\u00a0<\/p>\n<p>First\u00a0Acceptance\u00a0is in the business of claims that are\u00a0often\u00a0lower\u00a0exposure, the kinds\u00a0of cases\u00a0previously\u00a0mentioned by the GC that could be ripe for AI decision making.\u00a0These are cases where the cost of litigating the cases could easily\u00a0outweigh the exposure.\u00a0Perhaps not surprisingly then,\u00a0McMurtry\u00a0told me that AI is\u00a0\u201cgoing to\u00a0revolutionize\u00a0the\u00a0insurance\u00a0business from rate, claims, intake.\u201d\u00a0<\/p>\n<p>McMurtry\u00a0agreed that\u00a0there\u00a0are\u00a0certain types of claims that would be\u00a0better\u00a0candidates for some portion of AI review and decision\u00a0making.\u00a0Claims\u00a0with\u00a0estimates\u00a0and photos and other documentation of property\u00a0damage\u00a0that could be\u00a0examined\u00a0by AI for\u00a0initial\u00a0decision, for example. AI could\u00a0also help\u00a0determine the claims that\u00a0could\u00a0go straight\u00a0through\u00a0for payment, saving time and cost.<\/p>\n<p>And\u00a0another\u00a0key\u00a0area\u00a0that might be ripe for AI decision making is insurance\u00a0subrogation. For those\u00a0unfamiliar,\u00a0subrogation claims occur when one carrier pays a claim and then seeks recovery\u00a0from some other entity, often, in the\u00a0automobile context, another\u00a0insurance\u00a0carrier.\u00a0<\/p>\n<p>For those claims, AI decision making may make sense.\u00a0According to\u00a0McMurtry\u00a0\u201cwhere you\u00a0have a\u00a0defined\u00a0submission process,\u00a0having\u00a0those claims decided\u00a0by AI\u00a0makes sense. For one thing it\u2019s cost effective. It allows your people to do other things.\u00a0And\u00a0you\u2019re not impacting claimants. It\u2019s just simply a transaction between the two insurance companies to allocate that risk appropriately.\u201d<\/p>\n<p><strong>Some Road B<\/strong><strong>locks<\/strong><\/p>\n<p>But there are roadblocks.\u00a0For\u00a0insurance\u00a0companies like\u00a0First\u00a0Acceptance, the biggest roadblock is the\u00a0specter\u00a0of bad faith.\u00a0Insurance\u00a0companies\u00a0have a duty to deal with policy holders in good\u00a0faith. A breach of that duty can turn a minor claim into one that may result in a\u00a0catastrophic\u00a0nuclear verdict\u00a0since the damages\u00a0far exceed the policy\u00a0policy\u00a0limits.\u00a0McMurtry\u00a0explains: \u201cWe\u2019re very\u00a0very\u00a0cautious about where we want to use something\u00a0like AI\u00a0or insert a tool that would not be human reviewed.\u00a0A\u00a0tool that helps with the initial evaluation\u00a0is valuable\u00a0but there\u00a0still\u00a0must\u00a0be a\u00a0significant human touch in\u00a0the process.\u201d<\/p>\n<p>She explained that if an AI tool approved a pay out\u00a0quickly, great but if\u00a0it\u00a0denied a claim, that would be much tougher.<\/p>\n<p><strong>And Then There Is That Bias Thing<\/strong><\/p>\n<p>I also discussed the bias problem with\u00a0McMurtry.\u00a0The problem,\u00a0she says,\u00a0is that the data going into AI models often\u00a0comes\u00a0from\u00a0humans\u00a0with their own bias. So, the\u00a0models\u00a0will always have some bias.\u00a0She agreed\u00a0the trick will be getting the\u00a0AI decision\u00a0maker to a level of\u00a0acceptable\u00a0bias, keeping in mind human\u00a0decision\u00a0makers also have bias.\u00a0<\/p>\n<p>Indeed, many of our\u00a0procedural\u00a0and\u00a0evidentiary\u00a0safeguards\u00a0in litigation\u00a0are\u00a0designed to\u00a0minimize human bias. We will have to figure out\u00a0what\u00a0kinds of guardrails\u00a0need to be in place to reduce bias to that acceptable\u00a0level\u00a0if AI decision making is to be used, and in what contexts.<\/p>\n<p>Other\u00a0Open Questions<\/p>\n<p>As with the use of any AI tool, particularly in dispute resolution. there remain open questions:<\/p>\n<p>\u2022 How\u00a0do we correct errors and allow for appeal?<\/p>\n<p>\u2022 What\u00a0about transparency and explainability?<\/p>\n<p>\u2022 What\u00a0should the regulatory and ethical frameworks be?<\/p>\n<p>\u2022 Who\u00a0bears liability for AI mistakes?<\/p>\n<p><strong>Where Are We?<\/strong><\/p>\n<p>Going back to the AAA\u00a0announcement,\u00a0it\u2019s\u00a0important\u00a0to remember that\u00a0particularly\u00a0with businesses, arbitration is an agreed to\u00a0dispute\u00a0resolution technique.\u00a0Indeed,\u00a0I\u00a0<a href=\"https:\/\/www.techlawcrossroads.com\/2025\/02\/ai-powered-arbitration-is-arbitrus-ai-the-future-of-dispute-resolution\/\" rel=\"nofollow noopener\" target=\"_blank\">recently <\/a>wrote about a tool from\u00a0<a href=\"https:\/\/www.arbitrus.ai\/\" rel=\"nofollow noopener\" target=\"_blank\">Arbitrus.ai<\/a>.\u00a0The\u00a0tool is\u00a0essentially\u00a0an AI decision maker: where the parties agree,\u00a0Arbitrus.ai can be used to resolve any disputes arising out of the contract.<\/p>\n<p>And that\u2019s the key issue at least for now. Where the\u00a0parties\u00a0agree that a dispute or disputes can be resolved by AI, great.\u00a0It makes sense\u00a0from a cost and time perspective. But where they don\u2019t,\u00a0there\u2019s no way\u00a0we can\u00a0use an AI decision maker.\u00a0<\/p>\n<p>It\u2019s\u00a0much like\u00a0the right to a jury trial:\u00a0the parties\u00a0can\u00a0agree\u00a0to\u00a0waive their right to trial\u00a0by jury but can\u2019t be forced to.\u00a0The danger is that AI decision making might be forced by contract to those that don\u2019t want it but have little\u00a0bargaining\u00a0power. We have seen this often where large companies attempt to force\u00a0arbitration\u00a0by contract terms.<\/p>\n<p><strong>I<\/strong><strong>t Depends<\/strong><\/p>\n<p>So, yes,\u00a0AI dispute resolution may hold promise\u00a0in litigation,\u00a0whether it will, depends. It can\u2019t be forced on unwilling parties. It makes the most sense for low-exposure disputes, particularly between businesses with equal bargaining power.\u00a0<\/p>\n<p>But like everything with AI, we need guardrails. For now, consent must remain the cornerstone. We must ensure that consent is truly voluntary, not coerced through adhesion contracts that leave consumers with no real choice.<\/p>\n<hr class=\"wp-block-separator has-alpha-channel-opacity\">\n<p><em><strong>Stephen Embry is a lawyer, speaker, blogger, and writer. He publishes\u00a0<a href=\"https:\/\/www.techlawcrossroads.com\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">TechLaw Crossroads<\/a>, a blog devoted to the examination of the tension between technology, the law, and the practice of law<\/strong><\/em>.<\/p>\n<p>The post <a href=\"https:\/\/abovethelaw.com\/2025\/10\/the-ai-arbitrator-is-here-whats-next\/\" rel=\"nofollow noopener\" target=\"_blank\">The AI Arbitrator Is Here: What\u2019s Next?<\/a> appeared first on <a href=\"https:\/\/abovethelaw.com\/\" rel=\"nofollow noopener\" target=\"_blank\">Above the Law<\/a>.<\/p>\n<p>When the\u00a0<a href=\"https:\/\/www.google.com\/url?sa=t&amp;source=web&amp;rct=j&amp;opi=89978449&amp;url=https:\/\/www.adr.org\/&amp;ved=2ahUKEwiF-fTtlIGQAxU25MkDHXyhJEMQFnoECA8QAQ&amp;usg=AOvVaw3Zi6i9oxRl0UYAgreEZ9Ly\" rel=\"nofollow noopener\" target=\"_blank\">American Arbitration Association<\/a>\u00a0(AAA) recently\u00a0<a href=\"https:\/\/www.adr.org\/press-releases\/aaa-icdr-to-launch-ai-native-arbitrator-transforming-dispute-resolution\/\" rel=\"nofollow noopener\" target=\"_blank\">announced<\/a>\u00a0that it would be launching\u00a0an AI-powered arbitrator in November, it\u00a0raised\u00a0the question\u00a0of the future\u00a0role of AI\u00a0in litigation.\u00a0Indeed, it could\u00a0suggest a possible future\u00a0that\u00a0many litigators\u00a0still\u00a0insist will never arrive.<\/p>\n<p>I\u00a0often\u00a0give presentations\u00a0on the\u00a0use of AI in litigation and the impact it could and will have. I\u00a0frequently\u00a0hear from older\u00a0litigators\u00a0that they\u00a0aren\u2019t\u00a0all that\u00a0concerned about\u00a0what AI could\u00a0do\u00a0to their practices. After\u00a0all, they reason,\u00a0litigators have to\u00a0effectively\u00a0persuade other humans. They\u00a0need to\u00a0have\u00a0empathy, sympathy,\u00a0and\u00a0assess\u00a0body\u00a0language\u00a0and\u00a0subtleties\u00a0in others. And they have to have\u00a0the proverbial gut\u00a0instinct. None of these things does\u00a0AI have.\u00a0Yet.<\/p>\n<p>That may be true,\u00a0I say. But\u00a0have\u00a0you\u00a0considered the\u00a0possibility that, in the future,\u00a0the decision maker is,\u00a0itself,\u00a0an AI\u00a0tool?\u00a0How necessary will litigators be when all the relevant information is fed into a bot which then makes a decision? What will the litigator\u2019s job be?\u00a0How realistic is this?<\/p>\n<p><strong>The AAA Announcement<\/strong><\/p>\n<p>And lest we think that AI decision\u00a0making is\u00a0far-fetched,\u00a0eBay has been using an AI bot to\u00a0resolve\u00a0disputes between buyers\u00a0and sellers for some time.\u00a0Then came the AAA\u00a0announcement that it would\u00a0be launching\u00a0its\u00a0AI-powered arbitrator in\u00a0November. The\u00a0AI\u00a0arbitrator will, for now, be deciding\u00a0documents-only construction defect\u00a0cases, although in the future,\u00a0according to AAA,\u00a0it\u00a0may\u00a0be\u00a0used for\u00a0insurance\u00a0cases and\u00a0specifically\u00a0high-volume but low-dollar-amount\u00a0payer provider disputes.\u00a0<\/p>\n<p>In an interview on\u00a0<a href=\"https:\/\/lawnext.libsyn.com\/\" rel=\"nofollow noopener\" target=\"_blank\">Bob Ambrogi\u2019s\u00a0podcast<\/a>,\u00a0Bridget\u00a0McCormack, AAA\u2019s\u00a0president and CEO,\u00a0claimed that use of the tool\u00a0would reduce the cost of\u00a0construction\u00a0cases\u00a0by some 30-50% and\u00a0the time\u00a0required to\u00a0litigate and\u00a0resolve\u00a0a case by\u00a025-35%. She expects\u00a0improvement\u00a0over time.<\/p>\n<p><strong>It\u2019s All About Cost\u00a0<\/strong><strong>v.\u00a0<\/strong><strong>Exposure<\/strong><\/p>\n<p>It\u2019s those metrics that stand out.\u00a0Particularly\u00a0for\u00a0arbitration\u00a0but\u00a0for all\u00a0litigation, cost and time are\u00a0critical. Lots of\u00a0disputes go\u00a0unresolved\u00a0because\u00a0of these two factors. And\u00a0businesses\u00a0and\u00a0insurance\u00a0companies\u00a0would\u00a0tell you that\u00a0the transactional\u00a0costs of litigation\u00a0are\u00a0substantial.\u00a0<\/p>\n<p>In thinking about whether AI decision making in litigation is realistic, think about the following:\u00a0I\u00a0was talking to a general counsel recently about AI and its impact. I\u00a0asked\u00a0her\u00a0if\u00a0she were given the option of having an AI tool decide a case\u00a0without\u00a0so much cost\u00a0would\u00a0she agree? Her answer, even\u00a0a few months ago,\u00a0was\u00a0\u201cAbsolutely.\u00a0If\u00a0I could refer\u00a0any case where the amount\u00a0at stake\u00a0was less than, say,\u00a0$50k,\u00a0I would\u00a0do it in a\u00a0heartbeat.\u201d<\/p>\n<p>Why?\u00a0It\u2019s\u00a0because she was\u00a0spending\u00a0more in legal fees\u00a0and transactional costs for those low\u00a0exposure\u00a0cases than what they were worth.\u00a0So even if the AI\u00a0bot\u00a0might get\u00a0a few cases wrong or\u00a0achieve a\u00a0result\u00a0worse\u00a0than\u00a0what\u00a0a human lawyer\u00a0might achieve, it doesn\u2019t\u00a0matter all that much in the\u00a0long run. It\u2019s why insurance companies\u00a0are willing to pay\u00a0lawyers with low hourly\u00a0rates: the difference between\u00a0an A job and\u00a0a C job\u00a0doesn\u2019t affect the overall\u00a0result\u00a0that much.\u00a0So why pay any more\u00a0in legal fees than you have to?<\/p>\n<p><strong>Cases Ripe for AI Decision Making<\/strong><\/p>\n<p>If that\u2019s the case,\u00a0there are\u00a0certain kinds of cases\u00a0that might be ideal for this kind of decision making.<\/p>\n<p>I talked recently with\u00a0<a href=\"https:\/\/www.google.com\/url?sa=t&amp;source=web&amp;rct=j&amp;opi=89978449&amp;url=https:\/\/www.linkedin.com\/in\/sarannah-mcmurtry-3897b347&amp;ved=2ahUKEwixop-oqIGQAxWr4MkDHfMbJycQFnoECAsQAQ&amp;usg=AOvVaw3ovf_b6TH48lOFR55IwXzd\" rel=\"nofollow noopener\" target=\"_blank\">Sarannah McMurtry<\/a>, Executive Vice President and General Counsel of\u00a0<a href=\"https:\/\/www.google.com\/url?sa=t&amp;source=web&amp;rct=j&amp;opi=89978449&amp;url=https:\/\/www.firstacceptance.com\/&amp;ved=2ahUKEwiC7de2qIGQAxUb6ckDHeAvOk0QFnoECBwQAQ&amp;usg=AOvVaw1juzElSp1kyLb8ImdtqGGh\" rel=\"nofollow noopener\" target=\"_blank\">First\u00a0Acceptance Insurance Company<\/a>.\u00a0First Acceptance Insurance Company provides nonstandard auto\u00a0insurance and\u00a0specializes in coverage for high-risk drivers who may not qualify for traditional policies.\u00a0<\/p>\n<p>First\u00a0Acceptance\u00a0is in the business of claims that are\u00a0often\u00a0lower\u00a0exposure, the kinds\u00a0of cases\u00a0previously\u00a0mentioned by the GC that could be ripe for AI decision making.\u00a0These are cases where the cost of litigating the cases could easily\u00a0outweigh the exposure.\u00a0Perhaps not surprisingly then,\u00a0McMurtry\u00a0told me that AI is\u00a0\u201cgoing to\u00a0revolutionize\u00a0the\u00a0insurance\u00a0business from rate, claims, intake.\u201d\u00a0<\/p>\n<p>McMurtry\u00a0agreed that\u00a0there\u00a0are\u00a0certain types of claims that would be\u00a0better\u00a0candidates for some portion of AI review and decision\u00a0making.\u00a0Claims\u00a0with\u00a0estimates\u00a0and photos and other documentation of property\u00a0damage\u00a0that could be\u00a0examined\u00a0by AI for\u00a0initial\u00a0decision, for example. AI could\u00a0also help\u00a0determine the claims that\u00a0could\u00a0go straight\u00a0through\u00a0for payment, saving time and cost.<\/p>\n<p>And\u00a0another\u00a0key\u00a0area\u00a0that might be ripe for AI decision making is insurance\u00a0subrogation. For those\u00a0unfamiliar,\u00a0subrogation claims occur when one carrier pays a claim and then seeks recovery\u00a0from some other entity, often, in the\u00a0automobile context, another\u00a0insurance\u00a0carrier.\u00a0<\/p>\n<p>For those claims, AI decision making may make sense.\u00a0According to\u00a0McMurtry\u00a0\u201cwhere you\u00a0have a\u00a0defined\u00a0submission process,\u00a0having\u00a0those claims decided\u00a0by AI\u00a0makes sense. For one thing it\u2019s cost effective. It allows your people to do other things.\u00a0And\u00a0you\u2019re not impacting claimants. It\u2019s just simply a transaction between the two insurance companies to allocate that risk appropriately.\u201d<\/p>\n<p><strong>Some Road B<\/strong><strong>locks<\/strong><\/p>\n<p>But there are roadblocks.\u00a0For\u00a0insurance\u00a0companies like\u00a0First\u00a0Acceptance, the biggest roadblock is the\u00a0specter\u00a0of bad faith.\u00a0Insurance\u00a0companies\u00a0have a duty to deal with policy holders in good\u00a0faith. A breach of that duty can turn a minor claim into one that may result in a\u00a0catastrophic\u00a0nuclear verdict\u00a0since the damages\u00a0far exceed the policy\u00a0policy\u00a0limits.\u00a0McMurtry\u00a0explains: \u201cWe\u2019re very\u00a0very\u00a0cautious about where we want to use something\u00a0like AI\u00a0or insert a tool that would not be human reviewed.\u00a0A\u00a0tool that helps with the initial evaluation\u00a0is valuable\u00a0but there\u00a0still\u00a0must\u00a0be a\u00a0significant human touch in\u00a0the process.\u201d<\/p>\n<p>She explained that if an AI tool approved a pay out\u00a0quickly, great but if\u00a0it\u00a0denied a claim, that would be much tougher.<\/p>\n<p><strong>And Then There Is That Bias Thing<\/strong><\/p>\n<p>I also discussed the bias problem with\u00a0McMurtry.\u00a0The problem,\u00a0she says,\u00a0is that the data going into AI models often\u00a0comes\u00a0from\u00a0humans\u00a0with their own bias. So, the\u00a0models\u00a0will always have some bias.\u00a0She agreed\u00a0the trick will be getting the\u00a0AI decision\u00a0maker to a level of\u00a0acceptable\u00a0bias, keeping in mind human\u00a0decision\u00a0makers also have bias.\u00a0<\/p>\n<p>Indeed, many of our\u00a0procedural\u00a0and\u00a0evidentiary\u00a0safeguards\u00a0in litigation\u00a0are\u00a0designed to\u00a0minimize human bias. We will have to figure out\u00a0what\u00a0kinds of guardrails\u00a0need to be in place to reduce bias to that acceptable\u00a0level\u00a0if AI decision making is to be used, and in what contexts.<\/p>\n<p>Other\u00a0Open Questions<\/p>\n<p>As with the use of any AI tool, particularly in dispute resolution. there remain open questions:<\/p>\n<p>\u2022 How\u00a0do we correct errors and allow for appeal?<\/p>\n<p>\u2022 What\u00a0about transparency and explainability?<\/p>\n<p>\u2022 What\u00a0should the regulatory and ethical frameworks be?<\/p>\n<p>\u2022 Who\u00a0bears liability for AI mistakes?<\/p>\n<p><strong>Where Are We?<\/strong><\/p>\n<p>Going back to the AAA\u00a0announcement,\u00a0it\u2019s\u00a0important\u00a0to remember that\u00a0particularly\u00a0with businesses, arbitration is an agreed to\u00a0dispute\u00a0resolution technique.\u00a0Indeed,\u00a0I\u00a0<a href=\"https:\/\/www.techlawcrossroads.com\/2025\/02\/ai-powered-arbitration-is-arbitrus-ai-the-future-of-dispute-resolution\/\" rel=\"nofollow noopener\" target=\"_blank\">recently <\/a>wrote about a tool from\u00a0<a href=\"https:\/\/www.arbitrus.ai\/\" rel=\"nofollow noopener\" target=\"_blank\">Arbitrus.ai<\/a>.\u00a0The\u00a0tool is\u00a0essentially\u00a0an AI decision maker: where the parties agree,\u00a0Arbitrus.ai can be used to resolve any disputes arising out of the contract.<\/p>\n<p>And that\u2019s the key issue at least for now. Where the\u00a0parties\u00a0agree that a dispute or disputes can be resolved by AI, great.\u00a0It makes sense\u00a0from a cost and time perspective. But where they don\u2019t,\u00a0there\u2019s no way\u00a0we can\u00a0use an AI decision maker.\u00a0<\/p>\n<p>It\u2019s\u00a0much like\u00a0the right to a jury trial:\u00a0the parties\u00a0can\u00a0agree\u00a0to\u00a0waive their right to trial\u00a0by jury but can\u2019t be forced to.\u00a0The danger is that AI decision making might be forced by contract to those that don\u2019t want it but have little\u00a0bargaining\u00a0power. We have seen this often where large companies attempt to force\u00a0arbitration\u00a0by contract terms.<\/p>\n<p><strong>I<\/strong><strong>t Depends<\/strong><\/p>\n<p>So, yes,\u00a0AI dispute resolution may hold promise\u00a0in litigation,\u00a0whether it will, depends. It can\u2019t be forced on unwilling parties. It makes the most sense for low-exposure disputes, particularly between businesses with equal bargaining power.\u00a0<\/p>\n<p>But like everything with AI, we need guardrails. For now, consent must remain the cornerstone. We must ensure that consent is truly voluntary, not coerced through adhesion contracts that leave consumers with no real choice.<\/p>\n<hr class=\"wp-block-separator has-alpha-channel-opacity\">\n<p><em><strong>Stephen Embry is a lawyer, speaker, blogger, and writer. He publishes\u00a0<a href=\"https:\/\/www.techlawcrossroads.com\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">TechLaw Crossroads<\/a>, a blog devoted to the examination of the tension between technology, the law, and the practice of law<\/strong><\/em>.<\/p>\n<p>The post <a href=\"https:\/\/abovethelaw.com\/2025\/10\/the-ai-arbitrator-is-here-whats-next\/\" rel=\"nofollow noopener\" target=\"_blank\">The AI Arbitrator Is Here: What\u2019s Next?<\/a> appeared first on <a href=\"https:\/\/abovethelaw.com\/\" rel=\"nofollow noopener\" target=\"_blank\">Above the Law<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When the\u00a0American Arbitration Association\u00a0(AAA) recently\u00a0announced\u00a0that it would be launching\u00a0an AI-powered arbitrator in November, it\u00a0raised\u00a0the question\u00a0of the future\u00a0role of AI\u00a0in litigation.\u00a0Indeed, it could\u00a0suggest a possible future\u00a0that\u00a0many litigators\u00a0still\u00a0insist will never arrive. I\u00a0often\u00a0give presentations\u00a0on the\u00a0use of AI in litigation and the impact it could and will have. I\u00a0frequently\u00a0hear from older\u00a0litigators\u00a0that they\u00a0aren\u2019t\u00a0all that\u00a0concerned about\u00a0what AI could\u00a0do\u00a0to their practices. After\u00a0all, [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16],"tags":[],"class_list":["post-134720","post","type-post","status-publish","format-standard","hentry","category-above_the_law"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/134720","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/comments?post=134720"}],"version-history":[{"count":0,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/134720\/revisions"}],"wp:attachment":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media?parent=134720"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/categories?post=134720"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/tags?post=134720"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}