Contracts

Fastcase Inc., the legal research platform owned by Clio, sued Canadian AI company Alexi Technologies Inc. in federal court in Washington, D.C. on November 26, 2025, alleging breach of a 2021 data license agreement. Fastcase claims Alexi used licensed case law to train commercial generative AI models and display full-text decisions to users—uses explicitly prohibited under the original contract's "internal research purposes" restriction. The agreement permitted Alexi's staff attorneys to prepare client memoranda using the data, not to build a public, competing legal research platform. Fastcase seeks an injunction requiring Alexi to destroy both the datasets and the AI models trained on them, treating the model weights as infringing derivative works.

The American Arbitration Association, Integra Ledger, and a coalition of industry partners launched the Legal Context Protocol on June 24, 2026—an open-source standard designed to embed verifiable legal terms, consent mechanisms, and dispute resolution procedures into transactions conducted by artificial intelligence agents. The protocol addresses a fundamental gap in agent-to-agent commerce: most such transactions currently operate without clear jurisdictional governance or enforceable agreements.

In early 2026, the Trump administration ordered all federal agencies to cease using Anthropic's Claude AI models and designated the company a "Supply-Chain Risk to National Security" under the Federal Acquisition Supply Chain Security Act. The conflict originated when the Department of Defense demanded unrestricted access to Claude for "all lawful purposes," including potential use in autonomous weapons and domestic surveillance. Anthropic refused, citing civil liberties and human rights concerns. On February 27, President Trump issued an immediate cease directive with a six-month phase-out period. By March 5, the DOD's supply-chain designation took effect, barring military contractors from any commercial activity with Anthropic and removing the company from federal procurement systems.

On March 2026, more than 23,000 Kaiser Permanente nurses and approximately 2,400 mental health professionals in Northern California staged a coordinated six-hour strike across five facilities—Fresno, Oakland, Sacramento, Santa Clara, and Santa Rosa Medical Centers. The work stoppage, which ran from 8 a.m. to 2 p.m., was organized by the National Nurses United and the National Union of Healthcare Professionals to protest Kaiser's expanding use of artificial intelligence in patient care and clinical roles.

Vendor contracts are being urgently reclassified as AI risk vectors. In 2026, corporate counsel are discovering that SaaS and AI vendors have embedded contractual language permitting them to train, fine-tune, and evaluate proprietary models on customer data without explicit consent. What vendors historically labeled "service improvement" provisions are now recognized as mechanisms for secondary data exploitation. Law firms including Kilpatrick Townsend, Consilium Law, and SiLaw have published redlining guides instructing clients to demand explicit "no training," "no commingling," and "no retention" clauses in master service agreements.

The Department of War terminated its $200 million partnership with AI firm Anthropic on February 27, 2026, after the company refused to remove safety restrictions on its Claude model for military use. Defense Secretary Pete Hegseth had issued a three-day ultimatum on February 24 demanding Anthropic disable all guardrails. When CEO Dario Amodei declined, Hegseth designated Anthropic a "supply chain risk," and President Trump issued a presidential order barring all federal agencies from using Anthropic's systems. The dispute centered on two non-negotiable demands from Anthropic: no fully autonomous lethal weapons and no mass surveillance of Americans.

Enterprise buyers, AI vendors, and system integrators are converging on a recognizable contract template for AI services. The emerging standard includes shorter terms (often capped at 12 months), no automatic renewals, customer-controlled pilots, strict limits on data use for training, explicit output ownership, and tighter indemnity and audit provisions. The shift reflects a market-wide negotiation playbook rather than a single deal or regulatory mandate, though compliance frameworks like the EU AI Act and NIST are being mapped into contract language to define risk and governance obligations.

The Federal Trade Commission formally withdrew its proposed nationwide ban on noncompete agreements in February 2026, ending an enforcement effort that began in April 2024. A federal court in Texas blocked the rule in August 2024, and the FTC subsequently abandoned its appeal in September 2025 under Chair Andrew Ferguson. The agency removed the regulation from the Code of Federal Regulations on February 12, 2026. The FTC has shifted to case-by-case enforcement rather than broad rulemaking, signaling a policy realignment under the Trump administration that favors targeted action over sweeping regulations.