Legal tech · Industry brief

Brenda Leong's article in IAPP addresses AI governance requirements for lawyers, covering both client-advising and internal operational challenges. Key regulatory developments include bar association guidance from at least 18 U.S. jurisdictions establishing that existing professional conduct rules fully apply to AI tools, with notable variations like West Virginia's requirement for written informed consent before entering confidential data into generative AI systems and Virginia's emphasis on value-based fee arrangements over billing for AI efficiency gains. California's 2026 bar guidance specifically updated competence analysis to account for agentic systems, requiring controls including least-privilege access, restricted external actions, mandatory human approval before filings, and logging capabilities. Litigation enforcement has intensified from cautionary warnings following cases like Mata v. Avianca in 2023 to severe penalties in 2026, including the Ninth Circuit's six-month suspension of two attorneys in Lnu v. Blanche for citation fabrications, with federal and state courts in Alabama, Mississippi, New York and Texas issuing public reprimands and fines. The article notes that privilege and work-product protections remain unsettled with no categorical safe harbor established, while disclosure requirements vary by jurisdiction with no uniform national rule on whether lawyers must disclose AI use to clients or courts.

The FTC granted early termination of its investigation into IonQ's $1.8 billion acquisition of SkyWater, a specialized semiconductor foundry serving quantum-computing companies, closing the deal immediately upon clearance. The agency examined whether IonQ's ownership of SkyWater could create a competitive chokepoint by restricting rival quantum developers' access to fabrication services, gaining competitively sensitive information, or controlling pricing and capacity—classic vertical merger concerns. Despite receiving a Second Request, the review proceeded unusually fast; the two sitting FTC commissioners disagreed on remedies, with Chairman Ferguson favoring behavioral protections to safeguard rival access while Commissioner Meador argued the evidence did not justify intervention, ultimately deadlocking and allowing the transaction to proceed. National-security and domestic industrial-policy considerations played a visible role in the analysis, with both commissioners discussing the strategic importance of a domestic quantum and semiconductor supply chain, signaling how antitrust review increasingly overlaps with broader policy priorities in advanced-technology sectors involving defense-relevant inputs.

Technology M&A in China faces intensified regulatory scrutiny in 2026 across data security, foreign investment screening and IP transfer, with the Cyberspace Administration of China (CAC), Ministry of Commerce (MOFCOM) and State Administration for Market Regulation (SAMR) each holding material control over deal completion. Key regulatory trends include stricter data security reviews under the Data Security Law and Personal Information Protection Law, clarified cross-border data transfer measures following the 2024 Provisions on Promoting and Regulating Cross-Border Data Flows, expanded national security review of foreign investment in sensitive technology assets, and increased judicial focus on algorithm and source code ownership and transferability, requiring regulatory due diligence to run in parallel with commercial diligence from deal inception rather than sequentially after signing. Deal structures must address data carve-outs, escrow mechanics for source code and IP, transitional services arrangements, and split purchase price triggers tied to regulatory approval milestones, with onshore share purchases recommended as the default structure unless specific sectoral restrictions force alternatives; early engagement with PRC counsel, pre-signing regulator consultation where review is expected, and mapping of every cross-border data flow and third-party licence are essential to avoid blown timelines and renegotiated pricing.