With artificial intelligence tools becoming part of everyday decision-making, for some, chatbots are a first stop for help with answering questions, including questions that feel “legal” in nature. Such questions might include whether a contract clause is enforceable, how to respond to a demand letter, or what to say in an internal investigation. The AI response, while prompt and convenient, carries legal risk. Sensitive facts entered into a consumer-facing AI chatbot may be discoverable, and the act of using the tool can undercut attorney-client privilege.

A recent development in the Southern District of New York illustrates such risk. In a pretrial conference in United States v. Heppner, U.S. District Judge Jed S. Rakoff ruled from the bench that a defendant could not claim privilege over dozens of documents he generated using an AI service and then later forwarded to his lawyers. The underlying case is a federal criminal prosecution in which a grand jury indicted the defendant for securities fraud and other related charges. The FBI seized the “AI documents” during the execution of a search warrant at the defendant’s home at the time of his Nov. 4, 2025, arrest. Defense counsel later identified approximately 31 documents memorializing written exchanges with a generative AI platform. The defendant had prompted the chatbot to prepare reports outlining his defense strategy, his potential arguments on the facts and the law, and the charges he anticipated the government might bring. In ruling on what the court called a “question of first impression nationwide,” Judge Rakoff declined to adopt the defendant’s position that the AI documents were privileged.

Courts are continuing to address how traditional privilege doctrines apply to modern AI tools, and the implications for clients remain an evolving area of law. Using a third-party chatbot as a substitute for a confidential conversation with counsel can implicate waiver arguments and discovery exposure. To understand the significance of the ruling, it is helpful to review the principles on which it rests.

Read the full GT Alert.