The paradigm shift driven by artificial intelligence (AI) has gained remarkable momentum across many industries, and PE is no exception. Adopting AI is not just a trend; it is a profound turning point for PE. As we delve deeper into the heart of the transformation, however, the private funds industry finds itself at a crossroads where traditional approaches meet cutting‑edge solutions. Underscoring all of those developments is the reality that the widespread adoption of AI by fund managers brings a host of complex new challenges for legal and compliance teams to consider and mitigate. This second article in a two‑part series addresses the paramount issues AI raises in PE, such as ensuring privacy, preventing discrimination and maintaining quality control. The article also examines the ethical and regulatory concerns raised by AI and outlines best practices for implementation. The first article detailed the two primary types of AI and the various ways that fund managers can beneficially use the technology, including for portfolio analysis, due diligence, discovery, legal research and contract analysis. See “Safeguarding Proprietary Fund Data and Intellectual Property When Using Generative AI (Part One of Two)” (Oct. 19, 2023).