Your AI Brainstorm Just Waived Attorney-Client Privilege: The SDNY Wake-Up Call Every Executive Needs Now

by Martin Medeiros, Buckley Law, P.C.

In today’s dynamic digital landscape, artificial intelligence tools like large language model (LLM) based user interfaces popularly called “chatbots” have become indispensable for brainstorming ideas, drafting documents, and even strategizing legal defenses. However, a recent ruling from the Southern District of New York (SDNY) serves as a stark reminder that these innovative technologies can inadvertently jeopardize one of the cornerstones of the legal profession: attorney-client privilege. As specialists in AI and technology law at Buckley Law P.C., we regularly advise clients on how to harness emerging tech while safeguarding their confidential communications. This article explores the implications of this landmark decision, offering practical guidance to help you avoid potential pitfalls in your technology-driven legal practices.

Understanding Attorney-Client Privilege and Its Vulnerabilities with AI

Attorney-client privilege is a fundamental legal protection that shields confidential communications between a client and their lawyer from disclosure, ensuring open and honest dialogue essential for effective representation. This privilege applies only when communications are made in confidence, for the purpose of seeking or providing legal advice, and without waiver through disclosure to third parties.

The rise of AI chatbots—such as Anthropic’s Claude, Chat GPT, Gemini, Grok or similar generative tools—introduces new complexities. These platforms can analyze facts, generate arguments, and simulate legal strategies with remarkable efficiency. Yet, when users input sensitive information, they may unknowingly expose it to risks. Unlike secure, enterprise-grade systems designed for legal use, consumer AI tools often lack robust confidentiality safeguards. Their terms of service frequently allow data to be used for training models or shared with third parties, effectively turning the AI into an unintended “third party” that breaks the chain of privilege.

When users input sensitive information, they may unknowingly expose themselves to risks. Those confidential prompts are training data most publicly accessible and consumer grade chatbots. For the same or similar inputs, the chatbot may produce confidential names of parties, embarrassing facts, or your attorneys’ strategy enabling your adversaries to exploit that information given the right prompt. In one study, it took only five cycles for the chatbot to include data of the first query. How? Because user prompts entered into chatbots “train” the LLM to learn from user prompts. Dropping your attorneys’ memo into a chatbot to “get a second opinion” is a bell that cannot be unrung. Currently, innovation and creativity are for humans. Chatbots are slow in getting these skills right.

A Cautionary Tale: The Heppner Case and SDNY’s Ruling

Consider the case of Bradley Heppner, a finance executive facing federal charges of securities and wire fraud. After his arrest in November 2025, Heppner independently used Claude to create approximately 31 reports outlining potential defense strategies and legal arguments, which he later shared with his counsel. His lawyers claimed these documents were protected under attorney-client privilege and the work product doctrine, arguing they contained facts conveyed for legal advice and were prepared in anticipation of litigation.

On February 10, 2026, Judge Jed S. Rakoff ruled against this claim, determining that the AI-generated materials were not privileged. The court’s reasoning hinged on traditional privilege principles: by sharing information with Claude—a third-party AI without confidentiality guarantees or any licensure—Heppner waived any privilege. Claude’s privacy policy explicitly states that users have no expectation of confidentiality, and inputs could be used for model training or disclosed to others. That is the “prompts are training data” part mentioned above. Additionally, the work product doctrine did not apply because the documents were not created at the direction of counsel and did not reflect the lawyers’ own strategies.

This decision echoes concerns in other cases, such as disputes involving ChatGPT in mergers and copyright litigation, where AI chat logs have been sought in discovery. It underscores a growing “discovery nightmare” for legal teams, as prosecutors and opposing parties increasingly demand access to AI interactions.

Broader Implications for Technology Law and Best Practices

The Heppner ruling highlights a critical gap in how AI intersects with legal protections. For businesses and individuals relying on AI for everything from contract drafting to dispute resolution, the message is clear: casual use of consumer AI tools can lead to unintended disclosures, potentially turning innovative aids into liabilities. This is particularly relevant in technology transactions, where sensitive intellectual property or strategic plans are often discussed, or in disputes involving data privacy and AI ethics.

To mitigate these risks, consider the following best practices:

• Opt for Enterprise AI Solutions. Choose tools with built-in confidentiality features, such as those that do not train on user data or allow for secure, isolated environments. These can strengthen privilege claims by demonstrating an expectation of privacy. Ensure you have selected privacy and non-training prompt options.
• Document Counsel’s Involvement. If using AI for general research and non-confidential tasks, ensure your legal counsel is involved in what would help them the most. Some clients want counsel to use their research or AI generated content, which may drive costs up as counsel will have to validate all sources. It is often better to have a discussion with your attorney on AI use before you invest time on going down dead ends or be influenced in a way that alters facts. Research shows that AI chatbots influence human behavior.
• Update Privilege Logs and Policies. Clearly articulate how AI was used, if at all, to your attorney, emphasizing confidentiality measures and the legal purpose for such use. It is better to be candid with your attorney than have a judge present new facts to your attorney he was not prepared for – tell the whole truth to your attorney. Finally, organizations, firms, and clients, should also revise internal policies to guide AI usage in legal matters.
• Seek Expert Guidance Early. Navigating these nuances requires deep expertise in both AI technology and evolving case law. At Buckley Law, P.C., our team of technology law specialists has a proven track record of advising on AI integrations, from drafting compliant usage policies to representing clients in high-stakes disputes over data and privilege.

Why Partner with Buckley Law, P.C. for Your Technology Law Needs

In an era where AI is reshaping industries, the line between innovation and risk is thinner than ever. Whether you’re negotiating AI licensing agreements, defending against data breach claims, or strategizing privilege protections in litigation, Buckley Law technology attorneys give you peace of mind by combining cutting-edge knowledge of AI regulations with a client-focused approach to transactions and disputes. Our subtle yet strategic integration of legal foresight has earned us recognition for turning complex tech challenges into competitive advantages—making us the go-to firm for forward-thinking businesses.

If you’re incorporating AI into your operations or facing related legal hurdles, don’t leave privilege, intellectual property rights or confidentiality to chance. Contact Buckley Law, P.C. today at 503-620-8900 or email [email protected] to discuss how we can safeguard your communications and propel your technology initiatives forward.