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•The Corporate Law Center at Fordham University School of Law•Episode 97
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Can constitutional democracy survive the age of AI, or are we handing over governance to systems the law was never built to handle? In this episode of Bite-Sized Business Law Podcast, host Amy Martella sits down with Margaret Hu, Davison Douglas Professor of Law and Director of the Digital Democracy Lab at William & Mary Law School, to explore the intersection of AI and constitutional law. Margaret shares her journey from the Civil Rights Division post-9/11 to becoming one of the first scholars in AI law, as well as the release of her groundbreaking textbook on AI Law and Policy. She explains why AI is not just a technology but a potential competing constitutional force, and why legal frameworks must return to the first principles of democracy, rights, and accountability to prevent a move toward unconstitutional governance. They also delve into the EU AI Act, state-led regulatory efforts, the gaps in the U.S legal framework, the Anthropic-Pentagon controversy, and the risks of allowing national security to override constitutional checks and balances. Tune in to learn why building rights-first AI frameworks is essential to protecting democracy with Margaret Hu.
Key Points From This Episode:
Margaret’s background in civil rights and how it led her interest and eventual scholarship in AI and algorithmic decision-making.
Why AI governance cannot be separated from data privacy, surveillance, and cybersecurity.
The decade-long push behind Margaret’s groundbreaking textbook: AI Law and Policy.
Learn why AI is not just a technology, but a potential competing governance force.
Explore why AI legal frameworks should be built from first principles rooted in democracy.
Discover how AI could weaken America’s constitution.
Unpack the debate between sector-specific AI rules and horizontal AI laws in general.
Hear what the EU AI Act gets right, where it falls short, and how the U.S is borrowing from it.
Why Margaret is skeptical about anthropomorphizing AI.
Understand the common misconceptions around regulation and its impact on innovation.
The Pentagon-Anthropic issue and what it shows about AI, military contracts, and power.
She shares her outlook for AI laws and regulations under the current administration.
Advice for young lawyers on navigating an increasingly AI-shaped legal future.
I just am skeptical that, for example, anthropics claim that they can build constitutional AI is really even possible or preferable. Literally, that we can set up a competitive constitutional system, you know, through Claude. I think deserves deep skepticism.
SPEAKER_01
You're listening to Bite-sized business law, where we discuss big issues in small doses. This podcast is sponsored by the Fordham University School of Law Corporate Law Center, which is run by Fordham Law Professor Richard Squire and me, your host Amy Martella. Okay, let's get down to business. Welcome back to Bite-Sized Business Law. We are living through a moment that the legal system simply was not designed for. Artificial intelligence is making consequential decisions about who gets a loan, who gets bail, who gets hired, and who gets flagged as a security threat. And the body of law governing these decisions is not yet formed. How far can our existing legal doctrines stretch to meet AI challenges and where will they break entirely? Today's guest is exploring these questions. Margaret Who is the Davison Douglas Professor of Law at William and Mary Law School, where she's also the director of the Digital Democracy Lab. Her recent textbook on AI and the law is the first of its kind, and we're excited to hear about it today. Margaret, welcome. Thank you so much, Amy, for having me. Thank you for coming on. So why don't you tell us a little bit about your background? Because if one were to look back at your scholarship over the last, let's say, decade and a half or so, there's a big emphasis on data privacy and security and data regulation. So did you feel like it was kind of a natural next step for you to become interested in AI?
SPEAKER_00
Yeah, so my interest in AI systems and algorithmic decision making stemmed from my work in the civil rights division. I started on September 10th, 2001, the day before the terrorist attacks. And the Justice Department immediately created a post-9-11 task force, which I joined. And in my role in the civil rights division, I was specifically asked to be a liaison with the Department of Homeland Security and often attending meetings also with the White House Homeland Security Council. And what I saw in the 10 years almost that I spent in the federal government after 9-11 was the rise of data-driven systems and data-driven decision making. And so that algorithmic decision-making process I saw incorporated into both immigration enforcement systems as well as counterterrorism systems that depended on immigration databases. So my title in the civil rights division was Special Policy Council for Immigration-related discrimination. And what that meant was I had a front-row seat to some of the consequences, the civil rights and civil liberties consequences of relying on data analytics and predictive analytics and the types of systems that we saw, the very rapid and accelerated growth of after 9-11. And so when I left the Justice Department in 2010 and I began my journey into the academy, I was asked what type of scholar I would become, what type of research would be the main focus of my academic journey. And I said I wanted to do research on data surveillance, cyber surveillance, cybersecurity, and AI. And I was told that the field just did not exist yet. This was 2010. And so it was a bit difficult to convince people I had seen what I had seen. But I see all of these areas as an integrated tapestry. So I don't see data privacy and data protection separate from information security or AI. I just see that all of these governance systems work in concert with each other and that we need to keep all in sight when we're trying to map out a new generation of AI governance laws.
SPEAKER_01
Wow. So not only your first to write the textbook, but you were one of the first scholars in the field in general, it sounds like, if they were telling you, oh, this body of law doesn't exist.
SPEAKER_00
Yeah, I think that this is why Aspen Publishing came to me almost 10 years ago. I think that they started to see my research as unique. And they also saw that several law schools, a handful, were starting to teach AI in the law classes in 2014, 2015, 2016. And they said eventually there's going to be a need for a case book or a textbook. They said, right now, it's only just a small handful of law schools that are teaching this area, but we want you to write a case book or a textbook in this area, and we're going to give you five to 10 years. And it was very sobering to think about dedicating a decade in my life to trying to create this. But we're very tenacious and would not let it go. I remember one of the editors saying, We're only going to ask you. We're not going to ask anyone else. You're the only author that we want for this project. So they finally warmed me down. I mean, at first I was like, no, and it's a hard no. I said the field doesn't exist and there's no consensus on what body of knowledge would need to go into a case book or a textbook. So I said, I think it would be almost dangerous to my career to try to do this. I said I think that I would be taking a big risk by trying to put out one of the first case books or textbooks in this area. But they were very persuasive. So they finally convinced me to do it.
SPEAKER_01
Wow, what a daunting, daunting task. Well, we're very happy that you did it. And now it could not be more relevant.
SPEAKER_00
Yeah, I mean, the timing was excellent. And actually, it wasn't, you know, an accident because they really asked me to step on the gas when ChatGBT was released in November 2022. It really changed everything and the landscape of AI and the law overnight gained such instant prominence. So beginning in fall of 2022, it was incessant as far as you know, desire of Aspen publishing to make sure that this product got into the market as quickly as possible. So, you know, we were very fortunate that it was rolled out this past fall in October of 2025. And I feel really grateful that the timing is right spot on.
SPEAKER_01
Spot on. Let me get your thoughts on this idea, kind of to set up our conversation. I'm going to give you an example because I really think it speaks to overall why you wrote this book in the first place and why they wanted you specifically to write this book. So I don't know if you read about this firm Centrini. This is like a research firm that a few weeks ago they put together this kind of doomsday scenario that really rocked Wall Street and investors. And it was this very grim outlook where they were going through what AI might look like in a few years. And at the very end of the report, they have this conclusion. And their conclusion is this will be the first time in history the most productive asset in the economy will produce fewer, if not more, jobs. And nobody's framework fits because none were designed for a world in where the scarce input, which I'm assuming they mean human intellect and time, becomes abundant. So we have to make new frameworks. Whether we build them in time is the only question that matters. Now, putting aside the focus on jobs, right? Your thoughts about that last part, about the importance of building the right framework and how that fits into the book that the textbook that you wrote.
SPEAKER_00
I think that that is so critical and that really anchors my pedagogical theory for AI law and policy. What I ask the reader to think about is first the type of society we want to live in. What are the fundamental values? What are the first principles of the Constitution? What does it mean to abide by the rule of law? How do we want to center what we're striving for in the democratic experiment? And once we have crystallized those values and principles and those theories of law, then I ask the teacher or the student who's reading the book to ask whether or not these technological developments and these legal developments are consistent with those values and principles and theories. And I think that it is almost a failure of imagination for us not to conceptualize what could happen if we don't first lean into that question. The question of what do we want? What are we willing to fight for? What are we striving for? And what role should the law play in ensuring those outcomes? And I really hope that we don't keep asking the law to play catch up with technology and the law. What I really want is for us to have the imagination and the determination to think about law as a partner to get ahead of those issues and those concerns so that we create the type of architecture that then incentivizes the type of developments that we need to mitigate those risks that you're describing.
SPEAKER_01
Yeah. So people love to say about the law catching up to AI or regulating AI or crypto, Bitcoin, data privacy, you know, any type of new tech, it should be like regulating any other good or service or industry. When it comes to AI, are you in that camp too? Like, well, we know how to regulate things, or is that just a major oversimplification when it comes to AI?
SPEAKER_00
Going back to your question about whether or not we're at an inflection point in history where we're about to face something that is unprecedented. And if we believe that, whether or not we can just rely on analogies that are historical or legal. And my viewpoint is that we are in an unprecedented moment of history. And that in order to take that on headfirst, I think that what's very valuable is to go back 250 years in order for us to go forward 250 years. So I think that there are a lot of parallels between the American Revolution and the AI revolution. And I think that if we take that revolutionary moment seriously, then we have to think as deeply philosophically as our founders. So the Declaration of Independence and the US Constitution are deeply philosophical. So I think that if we just look at AI as a technology, we're going to miss the boat. We're going to miss the entire moment that this is, in my mind, not just a technology, but something that embodies a power structure and a knowledge structure. And because it has embedded within it, I believe, philosophical ambitions, it has the potential of competing with, if not overtaking, the US Constitution as a governing force. And if we understand that those are the stakes, then I think that that pushes us to take this as seriously as our founders in structuring laws and instruments of the law in order to try to get ahead and prevent the worst excesses of abuses of power.
SPEAKER_01
That is such a great and interesting way to think about AI that I have not heard yet, to not think about it simply as a new technology. And you have this comparison in the book where you actually compare the Bill of Rights. It's almost a metaphor for what AI regulation should be like, which I thought was very interesting.
SPEAKER_00
Yeah, because I think that we really need to understand that it is fundamental rights that are at stake. And I think even the conceptualization of inalienable rights and I think enlightenment virtues, we I think are risking finding ourselves in an anti-enlightenment moment without really understanding it. And then we can sleepwalk our way into a new form of a republic that we don't even recognize anymore.
SPEAKER_01
I guess I'm concerned about how we agree on those first principles. How do we, right now, in this moment, especially in America, how do we get any consensus about what we want society, what values we want to champion?
SPEAKER_00
Yeah, that's why I think that going back to first principles of our founders, especially on the eve of the 250th anniversary of the signing of the Declaration of Independence, that we remember some of those core values were checks and balances, separation of powers, you know, freedom of expression, accountability, transparency, due process under the law, freedom of association, the right to petition your government for grievances, all of those values in the first 10 amendments that form the Bill of Rights. I think we really need to think about what types of rights were considered fundamental and what types of allocations of power were deemed to be acceptable in order to make sure that we had a representative form of government. So it's a republic that was meant to be of the people, by the people, for the people. And I think we need to remember that means it is a government of people. And we really need to understand the risks of delegating a lot of that governance power to AI systems or algorithmic decision making. Because I think that we then risk undermining and defeating a lot of those fundamental and foundational ideas that anchor the entire republic. We are not a constitution without it, you know, constitutional republic. I understand what you're saying. It is so polarizing, and there's so much disagreement right now about what a government can and should do. But I think many people do recognize the value of the aspirations that are found in the Declaration of Independence and can be located in the US Constitution and the Bill of Rights. And I think that it's a good time to be reminded of those values and principles.
SPEAKER_01
Absolutely. You know what's crazy? On the flip side, I've heard people talking about granting AI certain rights. What if we grant AI the right to protected speech under the First Amendment? That seems like a little scary to me, especially if we remember that we are a republic of people.
SPEAKER_00
Absolutely. And I think it's really important to really interrogate who benefits from granting personhood or citizenship rights to AI systems. And does that shield companies from liability? And does it anthropomorphize AI systems in a way that is extremely marketable and can lead to greater economic outcomes that these companies are seeking? You know, going back to whether or not the AI systems potentially can create a competitive power structure to the US Constitution, if you increasingly grant power of the people to non-people, what does that do to our constitution? And I think that we really under need to understand those stakes, that the stakes are really high.
SPEAKER_01
All right, let me ask you some more specific questions that I'm interested in hearing your thoughts on. So I think like one of the most urgent parts for me in regulating AI is these really very high stakes contexts like criminal justice. You have this example in the textbook. I think I might get this right, but I might get it wrong. It's the mom who sued because there was a parole system where they used AI to calculate whether some prisoner was eligible for parole, that he was released, and maybe he killed her son, something like that. Correct me if I'm wrong. But it made me think: are we going to see a world where we have this sector-specific regulation, or are we looking for some sort of horizontal agreement on AI laws in general? Like it makes sense maybe to let AI, you know, go wild in like the medical research context, but like maybe we don't use it at all for criminal justice. What how do you think about that?
SPEAKER_00
That example I included in the case book in order to show the evolutionary process of AI governance, that it's not only statutory, but it can happen through litigation theories. In that instance, the question of whether or not you can hold these AI systems under a strict liability regime was being tested. And I think that it's very instructive to look to the EU and look to the European Union AI Act, for example, for a model of high-risk AI systems where they have categorized certain systems as creating unacceptable risks to fundamental rights and then moving down that triangle into increasingly lower risk systems that then need lesser and lesser regulatory oversight mechanisms. But that in the highest risk categories and in the unacceptable risk categories, we need to consider whether or not certain systems just should not be deployed at all or only deployed in limited circumstances after pretesting and review and ongoing monitoring. And I think that you can only achieve trying to get at a rights-based governance system if you look at the possibility that some systems are simply unacceptable. I think that if you look to the First Amendment, for example, it starts with Congress shall make no law. And it's because our founders and framers of the Constitution wanted it clear that there were certain things that the government should not do to people, that there are certain rights that are so sacred in this democratic experiment that the first thing that we need to agree upon is that there are certain things that the government shall never do to us. Even though I wonder whether or not the EU AI Act will be successful for many reasons, including that I think that it uses too much of a risk-based model and not enough leaning into the idea of fundamental rights. I do think horizontal regulation that focuses on rights first will get us closer to adhering to the aspirations of our constitutional republic more than a risk-based system.
SPEAKER_01
So it sounds like so there are global frameworks that we can learn from here. There are legal regimes that seem like they're being adopted elsewhere. Are we looking at them? Or is there any sense that lawmakers here are considering learning from them? Or what are you what are you seeing?
SPEAKER_00
Yeah, I think especially at the state level, I think that when you look at Colorado's Consumer Protection Act for AI, that incorporates quite a bit of the EU AI Act in the way that they're trying to define high-risk systems. And I think that when you look at California's attempt to regulate, you know, frontier AI and AI models, I think that they're borrowing very heavily from the EU as well. I think that what is critical for us to think about, especially many people think of these AI questions in terms of national security and the AI race and an AI Cold War, is what Senator Warner here in Virginia has explained is a competitive disadvantage in our defense if we don't regulate AI, that by increasingly embracing a deregulatory framework where innovation is considered the only way that we can protect our national security, that a critical lack of guardrails is actually a strategic vulnerability in our defense. So I think that we really need to understand that not only are we not borrowing comparative models and frameworks abroad at our own risk in falling behind legally, but I think that we are at risk of falling behind in our national security strategies as well.
SPEAKER_01
So is that your response, Margaret, when you get the innovation pushback? Because that's always one of the first pushbacks to people who are interested in getting a handle on AI, right? Oh, you're going to stifle uh innovation. What is your response typically to that argument?
SPEAKER_00
Yeah, my response is that I actually think very strong legal frameworks is excellent for innovation. I think companies are looking for stability. I think that they want to understand regimes of liability, and I think that they want to understand how their companies are going to intersect with the global AI market. And in order for us to achieve all of those effectively, I think we need stable legal frameworks governing AI. And this is something that, for example, Darren Osimaglu and others have explained is that prosperity and technological progress often need to go hand in hand with a very firm regulatory regime. That very rarely historically have we seen that success without it. And I think that it's also really important to, once again, going back to our founders and going back 250 years to go forward 250 years. Our founders were extremely tech-savvy. And they created, for example, a very effective regime of intellectual property law in the first instance, baked right into the US Constitution. Without their foresight and without understanding the importance of technology in setting up this new republic, I think we'd be in a very different nation. And so I think we really need to understand that law and technology can proceed side by side, but not only can they proceed side by side, that legal innovation and technological innovation can proceed side by side and must proceed side by side in order for us to maintain, I think, our strategic global advantage.
SPEAKER_01
Really funny to think about our founders being tech savvy. But you're right. I mean, you're you're totally right. Okay, so we've talked about regulation. Regulating AI from the outside, from the top in, from that, you know, the outside in. I want to hear about what you think about what AI companies should be doing themselves because the Wall Street Journal did they did this big article about two weeks ago on Anthropics in-house philosopher. And she has been hired, she, to teach Claude morals. And I think that's a great thing. Should probably be more than one person. Should probably have a huge team, right? Is this something that you want to see companies doing?
SPEAKER_00
Obviously, I think that having heightened awareness of the types of impact that these AI systems can have on society is so critical. And for companies to take their internal AI ethical frameworks very seriously and to build the most effective but least dangerous models that they can is something that I would champion. And so hiring a philosopher in-house in order to try to program into the system or work with the developers and making sure that any type of rule-based system that's guiding the LLM and generative AI is going to try to restrict or preempt prevent harms and risks. I applaud that. Ultimately, it's up to the people, government of the people by the people for the people needs to rely on people, human judgment, and our representative government demands that we hold our lawmakers and our policymakers responsible for making sure that these systems are as safe as possible. So I just am skeptical that, for example, anthropics claim that they can build constitutional AI is really even possible or preferable. Literally, that we can set up a competitive constitutional system, you know, through Claude. I think deserves deep skepticism. Now I'm very, very troubled by the recent events where it seems as if the government is announcing that AI companies that try to embrace safety standards and minimum guardrails will be punished.
SPEAKER_01
Help us understand that because some of our listeners may not have known all the details about what recently happened when they see these headlines about Anthropic and Open AI and the deal that fell through with the Pentagon. So can you help us understand what went on there and then also discuss what you're about to say about how troubled you are about it?
SPEAKER_00
About a week ago, where everything came to a head with Secretary Hegsath Omadai, the CEO and co-founder of Anthropic, where there were two red lines that Anthropic was trying to enforce that they did not want the Pentagon to use Anthropic's AI systems for mass surveillance and also did not want their systems used for lethal autonomous weaponry. And there was a disagreement on, you know, what was required contractually and whether or not the contract could proceed without taking those guardrails off. And Anthropic announced that they were willing to sacrifice the 200 million contract that they had with the Pentagon and that they would work with the Pentagon in transitioning their AI systems to another vendor, another contractor. But instead, the Pentagon not only said that they would move the 200 million contract to open AI, but also that they would designate Anthropic as a national security risk in their supply chain under the Defense Production Act. This is what I was referring to, as far as being very deeply troubled, that an AI company that one day is being embraced by the military, by the Pentagon, as creating some of the most safe and effective systems that can be integrated into our military and into our military operations, is the very next day then designated as a national security risk and particularly a supply chain risk, given that these systems have already been integrated into the Pentagon. So there's some real questions on one, why this designation was assigned overnight, seemingly without the type of evidentiary review that would be required to assign such a serious designation. But two, whether or not it was simply retaliation for not capitulating and taking off those two guardrails, the mass surveillance guardrail and the guardrail against using anthropics AI systems for the lethal autonomous weapons.
SPEAKER_01
And you worked in the federal government for a long time after 9-11. What I read is it's extremely unusual to designate a United States company as a supply chain risk. Is that right?
SPEAKER_00
It's extremely rare, but also I think that what's deeply concerning is increasingly the executive branch wanting to pick winners and losers and creating arbitrary rules that are being rolled out on social media overnight without the type of due process protocols or the type of procedural reviews required, for example, under the Administrative Procedures Act, or any internal type of review. How was that designation determined? Or was it just retaliation? And are we in a situation where increasingly these companies are being nationalized for reasons that are very extra legal? So I think that you saw many oil companies, for example, concerned about being told that they were going to go into Venezuela and set up these refineries. And that seemed very much like a move towards nationalization. You see concerns about now with anthropic whether this is an attempt to nationalize AI companies and really take autonomy and control out of their hands. You saw with the TikTok transfer over to Oracle that, you know, many expressed that it wasn't an open bid process, that it wasn't a transparent process. And once again, that just doesn't seem like that's conforming to, you know, free market, free enterprise philosophies that have typically guided, you know, many decisions that have influenced the market of the past.
SPEAKER_01
Yeah. And as the story was unfolding, there was a few minutes there where we thought, wow, okay, anthropic is standing its ground. And open AI might also not give in on these. And we're all like proud, like there's this moment of like, are we going to be okay? We're going to be okay. The kids are okay, you know, like they're not going to give in on these two important terms. But of course, then open AI did. And the Pentagon also has use of GROK. So really all it takes is one, right? At that point, it doesn't matter that one company stood its ground. So, what do you think this tells us about putting aside the retaliation piece, which we see happening in picking winners and losers, which we see happening in lots of contexts? What do you think this tells us about how we could expect this administration to handle AI in general and proposals for regulation and all of that?
SPEAKER_00
What's very interesting is OpenAI, at least publicly, is saying that they had the same criteria, that they also had similar red lines that was built into their contract, which really does increasingly raise the question, then what was at the heart of the dispute between the Pentagon and Anthropic. But I think the wider concern that many have is using national security as a way to just turn these AI systems into whatever those in power want them to be. But now they have this protective guise of it would be an existential risk to the nation unless we do it our way or my way. It's my way, the highway, because there's too many national security risks at stake. And I think that we've seen some of the worst abuses happen in that context in our US history. That when we're in a state of emergency and when you know people are acting from a place of fear, especially when we feel like it's an existential risk or a sovereignty threat, then I think we tend to abandon our commitments to the Constitution. And there's broad deference by the courts, you know, to what the commander-in-chief or military um leaders want in such circumstances. So I think we need to be really vigilant that national security is not being used in a way that's improper because it's just too important. It's too important to take national security seriously. We have to make sure that whatever national security decision making is done is done under the law and is consistent with the US Constitution and other international law. Otherwise, I think that we we risk too much.
SPEAKER_01
So you told us at the beginning, Margaret, that your book is really trying to capture this moment. It's trying to wake us up to the fact that, you know, this is a hugely important moment. It feels like those last seconds where you're standing on the very edge, right? But you still can do something. What would your advice be, Margaret, for young lawyers who are entering the profession and are concerned about all of these issues?
SPEAKER_00
Right now, it's so important for every lawyer to see themselves as a citizen lawyer. That's the philosophy here at William and Mary. Thomas Jefferson helped to found this law school immediately after helping to author the Declaration of Independence because he understood that a nation that is built on the rule of law needs educated lawyers who think about public virtue, who think about what it means to be a citizen that has a leadership role in building this experiment together. Every day is an opportunity to ask, you know, how somebody is fulfilling their roles and responsibilities in their individual capacity as a lawyer, but how the rule of law is serving this greater experiment. As a community, lawyering is so noble and really one of the pillars of democracy. So I think everybody makes a tremendous difference in upholding those values and principles that I wanted everyone to keep in mind about what type of society they wanted to live in in my very first chapter. I opened with that challenge to just close your eyes and ask that fundamental question. What are fundamental rights? What are inalienable rights? What does it mean to have separation and powers? What does it mean to have checks and balances? What does it mean to uphold a social contract? What does it mean to have transparency and accountability? What does it mean to have due process under the law? If all of us take that very seriously, then I think that this is part of why Thomas Jefferson felt as one of his first duties after authoring the Declaration of Independence that in 1779 he created this law school, William and Mary Law School, the oldest law school in the United States.
SPEAKER_01
Amazing. Well, Margaret, who you are doing such important work. People throw around the term groundbreaking a lot, but your groundbreaking textbook, AI, law and policy, is available now. I hope that law students everywhere will benefit from it. I know they will. And thank you so much for your time today.
SPEAKER_00
Thank you so much, Amy. This was fantastic. Thank you. Thanks, Margaret.
SPEAKER_01
Thanks to everyone at Fordham Law School, especially the Dean's Office and our corporate law center donors for supporting this podcast. Bite-sized Business Law is produced by WeEdit Podcast. Listen and subscribe to Bite-Sized Business Law on Spotify, Apple, or wherever you get your podcasts. The information in this podcast is for educational, informational, and entertainment purposes only, and does not constitute legal advice, nor is it intended to promote the organizations with which our guests are affiliated. For more information, check out our show notes, and thanks for listening.