Artificial Intelligence in Scottish business: Between legal caution and competitive urgency

Artificial Intelligence (“AI”) is not some far-off buzzword anymore. It is here, it is being used and it is changing how Scottish businesses operate, whether you are running a fintech startup in Edinburgh, a family farm in the Borders, or a hotel on Skye. The question is less if AI will matter, and more how well companies can adapt without tripping over skills shortages, legal headaches or cultural resistance.

Take the Bank of Scotland’s Business Barometer: six out of ten Scottish firms say they are already using AI. Of those, most report it makes them more productive and nearly four in five say it is boosting their profits. Not bad for technology that, a few years ago, was seen as the exclusive domain of Silicon Valley giants.

But scratch beneath the optimism and a familiar obstacle shows up: skills. The Data Lab and PwC estimate that AI could add £16.7 billion to Scotland’s GDP by 2030. Yet half of Scottish firms rate their own data and AI know-how as no better than “moderate.” Skills in data analysis, cybersecurity, and machine learning are in high demand but time, budget and access to tailored training remain key obstacles.

This shortage is not just a business problem, it also carries legal implications for companies. Directors cannot ignore their duties under the Companies Act 2006 and companies need to consider the data protection and employment law implications of using AI. The terms of any contracts being entered into with AI vendors should also be considered. What happens if an algorithm used in recruitment turns out to be biased? Or if an automated system makes a mistake that leads to financial loss? These are not hypothetical questions anymore.

To benefit when using AI, companies need to:

• Understand when to use AI: AI will not be an appropriate response to all problems within a business. Focus on the issue to be addressed and then consider whether AI is a suitable way to manage this.
• Invest in people: explain the uses for AI within your business to employees, provide the tools to use it effectively and adapt as software continues to evolve.
• Build proper governance: AI decisions need transparency, especially where customers or employees are affected.
• Get legal advice early: waiting until something goes wrong is costly.

In addition to an increase in Scottish firms adopting AI, several Scottish tech startups are developing and introducing new AI products to the market. For example, Brainnwave is turning raw data into decision-making tools, Continuum Industries is using AI for infrastructure planning, and Amiqus is simplifying compliance for firms drowning in paperwork.

To support responsible growth, the UK Government has launched AI Growth Zones, with Scotland set to host one of the first sites. These zones aim to attract billions in investment by supporting AI infrastructure including data centres powered by Scotland’s abundant renewable energy. Edinburgh will also host the UK’s new National Supercomputing Centre, further cementing Scotland’s role as a hub for AI innovation. In addition, Alphabet, the world’s fourth-biggest company, has just announced a £5bn investment in AI in the United Kingdom.

The bottom line? With government initiatives, investment and industry collaboration, Scotland is well positioned to be at the forefront of AI innovation. However, for companies across Scotland, utilising AI successfully will require preparing their people for change, ensuring compliance, and effectively managing the risks associated with AI adoption.

Erin Findlay, Solicitor: efi@bto.co.uk / 0141 221 8012

Gregor Cockburn, Trainee Solicitor: gco@bto.co.uk / 0141 221 8012