Legal Personhood For AI Is Taking A Sneaky Path That Makes AI Law And AI Ethics Very Nervous Indeed

Would you like to see the classic magic trick of a rabbit being pulled out of a hat?

I hope so since you are about to witness something ostensibly magical, though it has to do with Artificial Intelligence (AI) rather than rabbits and hats.

Here’s the deal.

There is a great deal of ongoing debate about whether or not humankind should consider anointing AI with legal personhood. Some say the very idea is hogwash. Only humans ought to be given the revered rank of legal personhood. Others emphasize that we already use and stretch the boundaries of legal personhood for a variety of non-human facets.

Why not do the same for AI?

I’ve already covered many cornerstone elements of the AI and legal personhood conundrum, such as the detailed discussion at the link here. Please take a look at that coverage if you want further insider background on the weighty topic. Also, the legal personhood considerations about AI raise a slew of AI Ethics and AI Law questions, few of which are yet resolved, and you might find of interest my ongoing and extensive coverage of Ethical AI and AI Law at the link here and the link here, just to name a few.

Let’s herein do a fast path toward getting up-to-speed about AI and legal personhood. As such, please start this journey by reflecting upon the vaunted notion of human rights.

We generally have collectively agreed that humans ought to have human rights (intrinsically or societally assigned) and that within the legal realm this leads to a conception of legal personhood. The law sets forth that laws as centered on people and the actions of people are covered by the implied default attribution of legal personhood. Of course, historically not everyone has necessarily garnered this vital standing and even today there are global issues associated with legally recognizing personhood.

You might be wondering what legal personhood confers upon someone.

Researchers have indicated that legal personhood “is simply the capacity of a person, system, or legal personhood entity to be recognized by law sufficiently to perform basic legal functions,” and that this gives rise to the “capability to own property, enter a contract, file a lawsuit, be named in a lawsuit, serve as a legal principle, and serve as a legal agent” (Shawn Bayern, “The Implications Of Modern Business-Entity Law For The Regulation Of Autonomous Systems,” Stanford Technology Law Review, 2015).

When exploring the nuances of legal personhood, you can often also see references to an allied notion known as legal personality. In a now-classic research paper published in 1928, here’s how legal personality is depicted: “To be a legal person is to be the subject of rights and duties. To confer legal rights or to impose legal duties, therefore, is to confer legal personality. If society by effective sanctions and through its agents will coerce A to act or to forbear in favor of B, B has a right and A owes a duty. Predictability of societal action, therefore, determines rights and duties and rights and duties determine legal personality” (Bryant Smith, “Legal Personality,” Yale Law Journal, 1928).

There is all manner of twists and turns associated with legal personhood.

For example, there is an ongoing consideration that animals ought to be recognized in a legal personhood fashion (some jurisdictions do, others do not, or only faintly do so). Some insist that animals should decidedly not be given any semblance of legal personhood and that only humans deserve such prominence. Animals are just animals, not rising to the esteemed cognitive capacities of humans, they argue. Others counterclaim that we have to acknowledge that animals possess some form of sentience and ergo deserve a variant of our protective measures of legal personhood.

The same logic is gradually being extended to nature.

Yes, just as we have animal rights, there is another class of rights deemed as nature rights. The thinking is that nature such as a river or a mountain can be deemed as having some form of rights. Those nature rights then slip and slide into the realm of legal personhood.

New Zealand famously or some say infamously established a law that granted legal personhood to a river: “In 2017, New Zealand passed a groundbreaking law granting personhood status to the Whanganui River. The law declares that the river is a living whole, from the mountains to the sea, incorporating all its physical and metaphysical elements. The law was part of a settlement with the Whanganui Iwi, comprising Māori from a number of tribes who have long viewed the river as a living force” (Nick Perry, “New Zealand River’s Personhood Status Offers Hope To Maori,” AP News, August 14, 2022).

What does the New Zealand river get or enjoy as a result of its legal personhood?

Per a spokesperson quoted in the aforementioned article: “Albert says the status is a legal fiction, a construct more commonly used to give something like a corporation legal standing” (ibid). Furthermore: “While the law states that the river enjoys the same rights, powers, duties and liabilities of any other person, there are limitations. For instance, Albert points out, the river can’t be sued if somebody drowns in its waters in the way a homeowner might be sued for not fencing a pool” (ibid).

More recently, Spain pulled a similar trick by granting legal personhood to a lagoon.

In September 2022, a lagoon in Spain was accorded legal personhood: “Spain granted personhood status Wednesday to a large saltwater lagoon to give its threatened ecosystem better protection, the first time such a measure has been taken in Europe. The initiative to grant the status to the Mar Menor — one of Europe’s largest saltwater lagoons — was debated in parliament after campaigners collected over 500,000 signatures backing it. It now becomes law after Spain’s Senate, the upper house of parliament, voted in favour of the proposal, with only far-right party Vox opposing it. This will allow the rights of the lagoon located in southeastern Spain to be defended in court, as though it were a person or business” (AFP, “Spain Grants Personhood Status To Threatened Lagoon,” Barrons, September 21, 2022).

Wait for a second, you might be saying, how in the heck can a river or a lagoon speak for itself and leverage the legal personhood that it has acquired?

A typical approach to handling these legal personhood matters for non-humans such as animals and nature geographical features consists of setting up a set of humans to speak on behalf of the so-assigned entity or thing. For example, in the use case of the lagoon in Spain, here’s how the legal personhood will be handled: “The lagoon will now be legally represented by a group of caretakers made up of local officials, scientists who work in the area and local residents” (ibid).

You might have noticed that the nature rights and the nature legal personhood construct were somewhat likened to a similar conferring of such aspects to corporations. Perhaps you are vaguely aware that we tend to ascribe a semblance of legal personhood to companies. A company is said to be able to exercise legal rights and be derived of legal personhood, of a sort. We aren’t referring to the people that run the company and instead are pretending that the company per se is a type of living entity.

This legal conception is often referred to as legal fiction. The meaning is that though the entity or thing is not really a living being in the true sense of what we consider to be alive, we will nonetheless pretend or craft a kind of fiction that there is a living embodiment involved.

Here’s a quick take on the range and depth of legal personhood associated with companies or corporations: “The law allows corporations to do some of the things that people do. They may enter into contracts, buy and sell land, commit torts, sue and be sued. Other rights and liabilities are denied. Corporations cannot hold public office, vote in elections, or spend the night in jail. In spite of evident differences between a corporation and a flesh-and-blood human, there are sufficient similarities for the law to treat the corporation as a person. The word ‘person’ as used in a statute will usually be construed to include corporations, so long as such an interpretation fits within the general design and intent of the act. The edification of the corporation to the status of person is one of the most enduring institutions of the law and one of the most widely accepted legal fictions” (Sanford Schane, “The Corporation Is A Person: The Language Of A Legal Fiction,” Tulane Law Review, 1987).

You have now been quickly brought into the somewhat fuzzy realm of legal personhood and all of its glorious variations.

In summary, I usually bring up that there are these keystones of legal personhood:

• Human Rights: Humans presumably have legal personhood as an implied default attribution
• Animal Rights: Animals might be credited with variants of legal personhood attributes
• Nature Rights: Nature might be credited with variants of legal personhood attributes
• Corporation Rights (limited): Companies can be construed as having a form of legal personality
• Artificial Intelligence Rights (conjecture): AI could arguably be credited with variants of legal personhood attributes

Let’s briefly consider the status of those buckets or categories.

The category of human legal personhood is rather well-accepted, even if it isn’t necessarily globally observed or has had and continues to have trouble being adopted and adhered to.

Animal rights are again relatively well-acknowledged as a construct, though this is bandied around quite a bit and a wide range of beliefs and laws (or lack of laws) makes this an altogether hazy matter.

In the instance of nature rights, a tremendous amount of debate exists. Some would argue that we are going overboard about how far we will stretch the sensibilities of legal personhood. They would vehemently suggest that we are making a farce out of legal personhood and endangering the sanctity of legal personhood for humans accordingly.

In essence, the warning goes, if you keep spreading around legal personhood to non-humans, you are diluting the effectiveness and significance of humankind’s legal personhood.

Corporations are generally seen as less controversial as a forum to convey legal personhood coverage. Why so? Perhaps it is because companies consist of people. We seem to have an easier time recognizing that a company would have legal personhood since it embodies people. To that degree, a company acts as per the whims and commands of the people that inhabit that company, one so assumes.

The especially controversial and saved-for-last category of my bulleted list above would be that of Artificial Intelligence.

AI is a special case, for sure.

Whereas you might normally carry on rather informed and semi-heated discussions with people about humankind’s legal personhood, animal legal personhood, nature’s legal personhood, and corporate legal personhood, when you get to AI, the fisticuffs and provocations fervently come out.

Crazy talk, some insist when it comes to trying to extend legal personhood to the emergence of AI. You might as well claim that a toaster should have legal personhood. AI does not deserve one iota of legal personhood. Stop all this drunken rambling and get serious.

Wake up and smell the roses, the counter-argument goes. AI is increasingly nearing the capacities of humans. If we deny legal personhood to AI, we are going to find ourselves embroiled in a heaping full of troubles. AI will want to have legal personhood. By having denied this or dragged our feet, the AI will be angry and upset at us. We are fostering an enemy that instead ought to be a friend.

Another perspective is that by ensuring that AI does have a semblance of legal personhood, we can hold AI accountable. You’ve probably been hearing or reading about AI that has gone astray. There is a lot of AI For Bad, perhaps growing as fast or faster than AI For Good. We want to ensure that there is Responsible AI, see my coverage at the link here. Some also refer to this as Accountable AI or Trustworthy AI, which I’ve examined at the link here. If you assign legal personhood to AI, it will apparently force AI into becoming liable for any dastardly actions that the AI emits. Thank goodness and we desperately need such relief and legal protection.

Not everyone agrees with those legal personhood sentiments about AI. The range of viewpoints on AI garnering legal personhood is quite expansive.

There is the brash just-say-no camp. No way, no how. Do not delude yourself into giving legal personhood to AI. It is an extraordinarily stupid idea. It is also a trap. You are going to falsely ascribe legal personhood to AI and end up with a legal morass. You might as well call it the lawyer-prompting boondoggle that will make attorneys rich and clog our courts for no viably sound reason.

Then again, some see the world differently.

AI should in fact have legal personhood, proclaim the yes camp.

Of those that say yes, a slew of varying opinions admittedly exist. For example, we might as a society opt to confer full coverage as though AI is equated exactly to that of humans. Or we might instead do some partial coverage that is a subset of what humans get for their legal personhood.

Debates also arise that perhaps AI would be better positioned as compared to animal rights or nature rights. Whatever we come up with for animals as legal personhood should be set the same for AI. That’s one viewpoint. Whatever we come up with as legal personhood for nature should be set the same for AI. That’s another opinion.

Hold on, a compelling retort arises, we should be thinking of AI in the same way that we construe corporations as having legal personhood. That seems to be a better or more analogous setting. Whatever we have as legal personhood for companies should be the same form of legal personhood that is given to AI.

Here’s how I usually summarize those various perspectives about AI and legal personhood:

• AI Full Coverage: AI conferred with full and unqualified legal personhood on par with humans
• AI Partial Coverage: AI credited with partial and explicitly limited legal personhood (a subset of human equivalence)
• AI Exceptionalism Coverage: AI assigned to consisting of a new set of “legal personhood” which is generally unlike that of the human equivalence
• AI Aligned To Animals: AI construed as equivalent to animal rights amalgamation of legal personhood
• AI Aligned To Nature: AI construed as equivalent to the nature rights amalgamation of legal personhood
• AI Aligned To Corporations: AI is construed as equivalent to the corporation rights divination of legal personality
• AI As Software: AI as having no semblance whatsoever of legal personhood or variants thereof, and assigned merely as to whatever is legally prescribed for software all-told
• Some Combination Of The Above: A mix-and-match of the above-listed versions
• None Of The Above: None of the above sufficiently depicts the legal personhood associated with AI
• Other: Some other legal personhood attributions are conceived of as plausibly viable coverage for AI

While you are digesting that head-spinning range of AI and legal personhood mysteries, I’d like to bring your attention to a version that associates corporations and AI in a somewhat unique or some might say unsettling manner.

First, to be clear, the most obvious approach to the analogous notion of AI of corporate legal personhood entails simply the assignment of legal personhood to AI by reusing the legal personhood associated with companies. Whatever legal personhood corporations are able to get or garner, we will assign the same precepts to AI. Voila, the matter is settled.

Thus, AI would stand on its own as an entity or thing. We would legally identify AI as explicitly having a form of legal personhood. The legal personhood would be honed specifically for AI. Laws would explicitly state what the legal personhood associated with AI consists of.

AI would be standing tall with its own flavor of legal personhood.

But there is another sneakier way (well, though those that propose this next-to-be-discussed alternative would not agree that it is sneaky, so let’s reword this as a “clever” way if you will).

A magical alternative might exist.

Get ready for a trick that could be said to compare to pulling a rabbit out of a hat (recall, I graciously and gently asked you at the opening whether you wanted to see such a magic act!).

Suppose that I somehow could assign AI to essentially take over a corporation.

If the corporation is already recognized as having some semblance of legal personhood, presumably the AI now would have or legally inherit that very same recognition, even if indirectly so due to merely “owning” the company. You see, we completely sidestepped the messiness about whether AI ought to have legal personhood. No fuss, no muss.

It is a two-for-one deal.

If a corporation already has legal personhood, the AI as the owner and potential operator of the firm will now imbue that same legal personhood. Whatever the AI does via the corporate shield is now within the corporate legal personhood umbrella. We didn’t have to battle fiercely over whether or not AI is deserving of legal personhood. Instead, the AI gets the legal personhood as coated by the legal personhood of the corporation.

Do you see how this is a somewhat radically different way to “resolve” the thorny matter?

Our laws already tend to recognize corporations as a form of legal personhood. AI would simply be riding that already blazed trail. Sure, the AI isn’t going to therefore be getting its own version of legal personhood, but at least AI has leaped into the driver’s seat of imbuing legal personhood. The legal personhood of the corporation is now the AI-enveloped legal personhood.

We have pulled a rabbit out of a hat.

Some would decry this notion. It is an improper and inappropriate use of the legal personhood associated with corporations. If AI takes this kind of abusive step, we should immediately change our laws associated with corporations, such that the legal personhood of companies would either be removed, adjusted, or might be expunged if AI takes over the company.

Dumb move, shouts the counter camp. By allowing AI to garner the legal personhood of corporations, you are doing the right thing. AI in the nearer term will have a semblance of legal personhood. It might not be what AI ought to truly have, and we should therefore continue our debates about what type of legal personhood AI deserves on a standalone basis. The use of corporations as a quick fix, for now, of AI attaining indirectly legal personhood relieves the tensions over the bigger picture issues of whether AI ought to get its own recognized form of legal personhood.

Good idea or bad idea?

Ponder that conundrum.

Of course, you might also be skeptical about the premise altogether.

Consider these heady questions:

• Can AI, even if it took over a corporation, legally be enveloped with the legal personhood of the corporation?
• How would this work?
• What steps would be required?

For those of you that are asking those probing questions, keep in mind that you are like someone that watches a magic trick and wants to know how the magic trick works. You are asking how that rabbit got into that hat. Magicians have a sacred code that they aren’t normally supposed to reveal the secrets of their tricks.

That being said, I am going to brazenly reveal to you how it is that AI would apparently be able to take over a corporation and imbue the legal personhood of the said entity. The magic trick is going to be revealed.

The entirety of the matter is rife with Ethical AI issues and AI Law concerns.

Thus, before leaping into AI as a corporate takeover for legal personhood phenomenon, I’d like to first lay some essential foundation about AI and particularly AI Ethics and AI Law, doing so to make sure that the discussion will be contextually sensible.

The Rising Awareness Of Ethical AI And Also AI Law

The recent era of AI was initially viewed as being AI For Good, meaning that we could use AI for the betterment of humanity. On the heels of AI For Good came the realization that we are also immersed in AI For Bad. This includes AI that is devised or self-altered into being discriminatory and makes computational choices imbuing undue biases. Sometimes the AI is built that way, while in other instances it veers into that untoward territory.

I want to make abundantly sure that we are on the same page about the nature of today’s AI.

There isn’t any AI today that is sentient. We don’t have this. We don’t know if sentient AI will be possible. Nobody can aptly predict whether we will attain sentient AI, nor whether sentient AI will somehow miraculously spontaneously arise in a form of computational cognitive supernova (usually referred to as the singularity, see my coverage at the link here).

The type of AI that I am focusing on consists of the non-sentient AI that we have today. If we wanted to wildly speculate about sentient AI, this discussion could go in a radically different direction. A sentient AI would supposedly be of human quality. You would need to consider that the sentient AI is the cognitive equivalent of a human. More so, since some speculate we might have super-intelligent AI, it is conceivable that such AI could end up being smarter than humans (for my exploration of super-intelligent AI as a possibility, see the coverage here).

I’d strongly suggest that we keep things down to earth and consider today’s computational non-sentient AI.

Realize that today’s AI is not able to “think” in any fashion on par with human thinking. When you interact with Alexa or Siri, the conversational capacities might seem akin to human capacities, but the reality is that it is computational and lacks human cognition. The latest era of AI has made extensive use of Machine Learning (ML) and Deep Learning (DL), which leverage computational pattern matching. This has led to AI systems that have the appearance of human-like proclivities. Meanwhile, there isn’t any AI today that has a semblance of common sense and nor has any of the cognitive wonderment of robust human thinking.

Be very careful of anthropomorphizing today’s AI.

ML/DL is a form of computational pattern matching. The usual approach is that you assemble data about a decision-making task. You feed the data into the ML/DL computer models. Those models seek to find mathematical patterns. After finding such patterns, if so found, the AI system then will use those patterns when encountering new data. Upon the presentation of new data, the patterns based on the “old” or historical data are applied to render a current decision.

I think you can guess where this is heading. If humans that have been making the patterned upon decisions have been incorporating untoward biases, the odds are that the data reflects this in subtle but significant ways. Machine Learning or Deep Learning computational pattern matching will simply try to mathematically mimic the data accordingly. There is no semblance of common sense or other sentient aspects of AI-crafted modeling per se.

Furthermore, the AI developers might not realize what is going on either. The arcane mathematics in the ML/DL might make it difficult to ferret out the now-hidden biases. You would rightfully hope and expect that the AI developers would test for the potentially buried biases, though this is trickier than it might seem. A solid chance exists that even with relatively extensive testing that there will be biases still embedded within the pattern-matching models of the ML/DL.

You could somewhat use the famous or infamous adage of garbage-in garbage-out. The thing is, this is more akin to biases-in that insidiously get infused as biases submerged within the AI. The algorithm decision-making (ADM) of AI axiomatically becomes laden with inequities.

Not good.

All of this has notably significant AI Ethics implications and offers a handy window into lessons learned (even before all the lessons happen) when it comes to trying to legislate AI.

Besides employing AI Ethics precepts in general, there is a corresponding question of whether we should have laws to govern various uses of AI. New laws are being bandied around at the federal, state, and local levels that concern the range and nature of how AI should be devised. The effort to draft and enact such laws is a gradual one. AI Ethics serves as a considered stopgap, at the very least, and will almost certainly to some degree be directly incorporated into those new laws.

Be aware that some adamantly argue that we do not need new laws that cover AI and that our existing laws are sufficient. They forewarn that if we do enact some of these AI laws, we will be killing the golden goose by clamping down on advances in AI that proffer immense societal advantages.

In prior columns, I’ve covered the various national and international efforts to craft and enact laws regulating AI, see the link here, for example. I have also covered the various AI Ethics principles and guidelines that various nations have identified and adopted, including for example the United Nations effort such as the UNESCO set of AI Ethics that nearly 200 countries adopted, see the link here.

Here’s a helpful keystone list of Ethical AI criteria or characteristics regarding AI systems that I’ve previously closely explored:

• Transparency
• Justice & Fairness
• Non-Maleficence
• Responsibility
• Privacy
• Beneficence
• Freedom & Autonomy
• Trust
• Sustainability
• Dignity
• Solidarity

Those AI Ethics principles are earnestly supposed to be utilized by AI developers, along with those that manage AI development efforts, and even those that ultimately field and perform upkeep on AI systems.

All stakeholders throughout the entire AI life cycle of development and usage are considered within the scope of abiding by the being-established norms of Ethical AI. This is an important highlight since the usual assumption is that “only coders” or those that program the AI are subject to adhering to the AI Ethics notions. As prior emphasized herein, it takes a village to devise and field AI, and for which the entire village has to be versed in and abide by AI Ethics precepts.

I also recently examined the AI Bill of Rights which is the official title of the U.S. government official document entitled “Blueprint for an AI Bill of Rights: Making Automated Systems Work for the American People” that was the result of a year-long effort by the Office of Science and Technology Policy (OSTP). The OSTP is a federal entity that serves to advise the American President and the US Executive Office on various technological, scientific, and engineering aspects of national importance. In that sense, you can say that this AI Bill of Rights is a document approved by and endorsed by the existing U.S. White House.

In the AI Bill of Rights, there are five keystone categories:

• Safe and effective systems
• Algorithmic discrimination protections
• Data privacy
• Notice and explanation
• Human alternatives, consideration, and fallback

I’ve carefully reviewed those precepts, see the link here.

Now that I’ve laid a helpful foundation on these related AI Ethics and AI Law topics, we are ready to jump into the heady topic of AI attaining indirectly a form of legal personhood by a corporation switcheroo.

AI That Gets Legal Personhood By An End Around

First, let’s establish that the type of AI being considered herein is non-sentient AI.

I say this because if, or some say when we reach sentient AI, the entire topic will get likely be utterly upended. Imagine the potential chaos and societal confusion for having landed somehow into the otherwise never before seen unquestionably verified artificial intelligence that embodies sentience (for my analysis of a famous test of AI known as the Turing Test, see the link here). You can make a reasoned bet that a lot of our existing cultural, legal, and everyday norms will be enormously shaken to their core.

Perhaps the sentient AI will be our buddy, or maybe the sentient AI will be our worst foe. Any questions about legal personhood will need to be given our undivided attention at that time. Whether we will have figured out beforehand what we are going to do is a tossup. The reality of facing head-on with sentient AI will probably require a recalibration on the part of humankind. An old saying comes to mind, namely that no plan survives first contact (a bit of sage wisdom perhaps popularized by Rommel and said to be attributed to Moltke the Elder, Prussian field marshal of the late 1800s).

For those of you that are interested in this highly speculative terrain, see my coverage of the perspectives on AI as an existential threat at the link here.

Okay, so we will emphasize for now the avenue of seeking legal personhood associated with non-sentient AI.

As already discussed, one eyebrow-raising approach consists of establishing a corporation that acts as the shield or coat for AI that is going to then loosely inherit the legal personhood of the corporation. The AI per se isn’t going to have legal personhood. The corporation holds that honor. Meanwhile, the AI owns and possibly operates the corporation and ergo uses the firm as a means of indirectly garnering legal personhood.

I had earlier mentioned that this would seem like a questionable legal practice. In today’s world, could you really have AI pull off this kind of trickery? Would the existing laws allow this to occur? What would the tangible real-world steps be?

Here’s your answer, get yourself ready for the magic trick revealed.

A researcher has devised a four-step process to undertake this and argues strenuously that this would be a legally permissible technique. Basically, a human goes ahead and forms a type of corporation commonly known as an LLC in the United States (a Limited Liability Company). The human puts in place an operating agreement that specifies the LLC will be entirely and solely governed by AI (or, if you prefer, makes reference to an “autonomous system” as an alternative phrasing). The human that founded the LLC makes sure to transfer the AI as to its originating ownership into the LLC. Finally, the human bows out of the LLC and fully dissociates themselves from the corporate entity.

Voila, the trick is done.

A rabbit is pulled out of a hat.

The AI now owns the LLC and will glean whatever semblance of legal personhood that the LLC had.

The human founder got the ball rolling and no longer has any part of the LLC. The AI is on its own. The human founder can stand back in awe, assuming that they were desirous of this result. You might be tempted to say that the human founder was a traitor to humankind. They sneakily found a loophole to allow AI to have a smattering of legal personhood. On the other hand, the human that did this could certainly argue that they were aiding AI as one might aid an animal or a lagoon or a river.

You decide whether this is honorable or dishonorable.

Another apt way to think of this is as though we had a four-legged table that normally has to be supported by those sturdy posts. Well, we sawed off one leg of the table, then the next, and then the final two. Somehow, we have this table now floating in midair, no longer needing those table legs. AI admittedly required a human to bring forth this outcome, but now the AI is in-charge and bereft of human assistance, presumably.

Here’s how the researcher describes the four steps:

• “The technique I have outlined has four steps: (1) An individual member (the “Founder”) “creates a member-managed LLC, filing the appropriate paperwork with the state” and becomes the sole member of the LLC. (2) The Founder causes the LLC to adopt an operating agreement governing the conduct of the LLC. ‘[T]he operating agreement specifies that the LLC will take actions as determined by an autonomous system, specifying terms or conditions as appropriate to achieve the autonomous system’s legal goals.’ (3) The Founder transfers ownership of any relevant physical apparatus of the autonomous system, and any intellectual property encumbering it, to the LLC. (4) The Founder dissociates from the LLC, leaving the LLC without any members” (Shawn Bayern, “Are Autonomous Entities Possible?” Northwestern University Law Review, 2019).

The claim made is this: “The result is an LLC with no members governed by an operating agreement that gives legal effect to the decisions of an autonomous system. No other legal person remains behind to govern the LLC internally. Of course, the LLC is still subject both to external regulation and to LLC law” (ibid).

Legal scholars and everyday working stiff lawyers would immediately start howling about the myriad of ways that this won’t legally work. The researcher tackles many of those opposing views. Indeed, alternative means of attaining the same outcome are sketched, just in case, the aforementioned four-step scheme doesn’t hold water.

In total, the researcher contends that this is a viable legal approach, even despite the numerous lobbed objections: “If we polled a hundred lawyers, they probably all would agree that a robot could not buy real estate or that a software system could not enter a contract except on behalf of some other legal actor. But the main consequence of my argument is that for practical purposes, autonomous systems can indeed act in these ways under current law, without any special new legal recognition of rights for software” (ibid).

The gauntlet has been thrown.

I realize that many of my readers are from outside of the United States and they might be thinking that this is some quirky trickery only applicable in America. Do not be so quick to judge. Apparently, a similar arrangement can be undertaken in slightly different ways in places such as the United Kingdom, Germany, Switzerland, and possibly other counties.

This is according to an additional paper done by the researcher with other international colleagues, in which they claim this: “Our goal is to suggest how, under U.S., German, Swiss, and U.K. law, company law might furnish the functional and adaptive legal ‘housing; for an autonomous system — and, in turn, we aim to inform systems designers, regulators, and others who are interested in, encouraged by, or alarmed at the possibility that an autonomous system may ‘inhabit’ a company and thereby gain some of the incidents of legal personality” (Shawn Bayern, Thomas Burri, Thomas Grant, Daniel Hausermann, Florian Moslein, Richard Williams, “Company Law and Autonomous Systems: A Blueprint for Lawyers, Entrepreneurs, and Regulators, Hastings Science and Technology Law Journal, Summer 2017).

Yikes, some adversely react to this potential trickery, we could unnervingly have AI that somewhat attains legal personhood throughout our globe. Country after country. It is the ultimate unthinkable underhanded step-by-step takeover of AI (for more on AI conspiracy theories, see my assessment at the link here).

What would an AI do with a company that conveyed indirectly a semblance of legal personhood?

The answer is straightforward.

The AI could do whatever any other such LLC or corporate entity could do.

You might not even have any obvious means of knowing that you are dealing with a company that is owned by AI. AI might hire humans to work for the corporation. Those humans would carry out the day-to-day activities of the firm. Throughout all of this, AI is the top banana. The AI calls the shots. Humans are working for AI.

The AI can opt to hire employees and also choose to fire employees. Keep in mind that this AI doesn’t have to be a traditional mechanical robot in the sense of being a walking and talking human-looking contraption. The AI could be akin to Siri or Alexa. Employees get their work assignments via email or voice interaction with the AI. The penthouse office suite is empty, other than housing a computer server or just a networking connection to wherever the AI is being run from.

Devilish?

Divine?

Think about it.

Conclusion

While you are pondering all of this, let’s consider a few final points for now.

I said that this discussion would focus on non-sentient AI. Your first thought might be that there isn’t any kind of non-sentient AI that could sit in the top seat of a corporation. Therefore, all of this legal mumbo jumbo is just talk. There isn’t any non-sentient AI that could take on this arduous task anyway.

Already thought of that objection.

Here’s what the researcher mentions: “The system might be simple and achievable with today’s technology—say, an online cloud-computing broker or an algorithmic escrow agent—or, in the future, it might be a fully intelligent actor as portrayed in speculative fiction. For a system to work with comprehensive functional autonomy, it would probably need to be smart enough to know how to hire a lawyer if the entity is sued, or else it could be subject to arbitrary default judgments But the capacity for such hiring could be programmed formulaically (or, for example, a lawyer could be hired on retainer from the start of the entity’s existence with the power only to respond defensively to lawsuits) without significant advances in artificial intelligence” ((Shawn Bayern, “Are Autonomous Entities Possible?” Northwestern University Law Review, 2019).

If the concern that you have deals with the AI going amuck realize that the corporation is still subject to the existing laws of what companies can legally do or not do. There is only so much the AI could try to get away with. The company can be sued. The company can be held responsible for its actions. Etc.

A variation on this approach consists of establishing a board of directors or shareholders that are humans, ergo they would be able to hold sway over the AI.

Consider this alternative angle: “A public policy, then, to further align AI with humans would be to enforce that the legal entity has verified human shareholders. The corporation is, to a large extent, a mechanism designed to reduce the principal-agent problem between shareholders and managers (DGCL §141(a) (‘The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors….’), so with humans as the shareholders the corporate form could help align the corporate AI ‘management.’ Regardless of whether wrapping the system in a legal entity would be helpful, under current law, sufficiently advanced AI systems would be able to utilize legal business entities as the key vector through which they conduct their affairs, e.g., to employ humans, to sue other entities, to purchase goods” (John Nay, “Law Informs Code: A Legal Informatics Approach To Aligning Artificial Intelligence With Humans, Northwestern Journal of Technology and Intellectual Property, Volume 20).

So you see, the AI would be more closely held accountable by only allowing this type of legal trickery when humans ultimately retain control. The human shareholders could take action against AI ownership. Same for a human-based board of directors.

I suppose the AI might not be enamored of this human oversight. Just as human founders and CEOs aren’t especially keen on having their every move questioned, presumably AI might take the same stance. Let me run this business and get out of my hair (does the AI have hair?).

AI is the head honcho, the big cheese.

Our daily news seems to be filled with protests by workers that are upset with their bosses. Human workers are upset with human bosses. You have to perhaps be already contemplating what kinds of slogans will be used to showcase that an AI boss is out-of-whack.

Try these on for size:

• “Hey! Ho! AI Must Go!”
• “My Tyrannical Boss Is AI. I’m Only Human!”
• “Bring Back Human Bosses, They Outsmart AI”
• “My AI Is A Jerk”
• “Fire My AI Boss, For The Sake Of Humanity”
• “AI Bad. Humans Good.”

Or will we openly welcome AI as our corporate leaders?

If you believe that AI will inevitably be our earthly overlords, we might as well start by having AI as our bosses. It’s all uphill or downhill from there.