TIME FOR #BIGLAW TO CALL THEIR MALPRACTICE INSURERS?: Court Holds Privileged Information Shared with Gen AI May Lose its Privileged Nature–and The Czar is Always Right About Everything

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Just a reminder that Troutman Amin, LLP issued a press release JUST LAST MONTH that it would NEVER allow its lawyers to use GenAi for substantive legal work.

PRESS RELEASE: Powerhouse Litigation Shop Troutman Amin, LLP Bucks Legal AI Trend: Announces “Zero Tolerance” Policy For Generative AI Usage By Firm Attorneys

Just a few days later Groq’s chief legal officer seemingly responded stating she was “‘Horrified’ By Some Firms’ Ongoing AI Resistance”; see https://www.law360.com/pulse/articles/2438987/groq-s-clo-horrified-by-some-firms-ongoing-ai-resistance (Counsel Hart very politely turned down my subsequent invite to speak at Law Conference of Champions– I invited her to share her view on the subject.)

Well get ready for a lot more “horrifying” AI resistance in the practice of law.

Probably because it is malpractice to use it now.

In U.S. v. Heppner, 25-cr-00503 (S.D.N.Y. Feb 10, 2026) Manhattan-based U.S. District Judge Jed S. Rakoff issued a ruling that may turn GenAI usage in the practice of law radioactive.

At issue were search queries fed to Claude and resulting outputs from Claude that were subsequently provided to counsel in connection with obtaining legal advice.

Importantly the information fed to Claude contained privileged information and the information that came from Claude was conveyed to Heppner’s #biglaw counsel for the purpose of obtaining legal advice.

But neither of these facts mattered.

By feeding the privileged information to a third-party AI engine Heppner was apparently deemed to have waived the privilege. Obviously Claude’s output is not privileged because Claude is not even remotely a licensed attorney. And the mere fact the documents were then handed to a lawyer did not make them privileged anew–you can’t make a non-privileged document privileged by handing it to a lawyer (sorry.)

Now the docket entry is just a text order granting the government’s motion–it doesn’t even specify which motion– but reporting on the issue from around the legal rags makes it clear Judge Rakoff granted the government’s motion to deem the AI materials NOT privileged.

Indeed His Honor didn’t even consider this to be a close call. In the Court’s view:

“I’m not seeing remotely any basis for any claim of attorney-client privilege.”

Or so reported Michael Berman on JD Supra.

My goodness.

Mind blown.

So what do we make of this?

Well if I am one of these moronic #biglaw firms that deployed Harvey and similar models I would be sweating right now. Still, they might have some slender reed of protection here:

  1. Heppner seemingly holds directly a CLIENT waives the privilege by using third-party Gen AI because the client is the holder of the privilege. A law firm seemingly cannot waive the client’s privilege by using the tool– unless the client were silly enough to sign off on the lawyer’s use of the GenAI, in which case seems like privilege vanishes. And, of course, if the lawyers failed to advise the client of the privilege vanishing that might also be malpractice. Hmmmm.
  2. More hopeful for all these #biglaw types is that Heppner did not involve work product– the searches at issue here were not done by lawyers or at the behest of lawyers. So there is a GOOD chance Harvey searches/output ARE covered by work product protections. Only problem is that work product is NOT a complete privilege (as any first year lawyer can tell you). So get ready for a bunch of Hickman v. Taylor fights! Awesome.

Bottom line any law firm using gen AI is going to get smoked by law firms that don’t. And in-house lawyers who are foolish enough to insist on outside counsel’s use of such products are just not going to be around very long.

And if you are at a law firm that ISN’T using Gen Ai but you’re not SPEAKING OUT AGAINST IT you are still part of the problem.

Sorry not sorry.

But I do love you all.

Be safe and chat soon.

 

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Published by Eric "Czar" Troutman

The Czar of TCPAWorld Eric Troutman is one of the country’s prominent class action defense lawyers and is nationally recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance. He has served as lead defense counsel in more than 70 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems. Eric has built a national litigation practice based upon deep experience, rigorous analysis and extraordinary responsiveness. Eric and his team feel equally at home litigating multibillion dollar telecommunications class actions in federal court as they do developing and executing national litigation strategies for institutions facing an onslaught of individual TCPA matters. They thrive in each of these roles – delivering consistently excellent results – while never losing sight of the client experience. While many firms now tout TCPA expertise, Eric has been there from the beginning. He built one of the country’s first TCPA-only defense teams and began serving as national TCPA counsel for his clients nearly a decade ago. This perspective allows him to swiftly develop the right litigation strategies for dealing with recurring problems, without wasting time on tactics that are bound to fail. Eric’s rich historical perspective and encyclopedic knowledge of the TCPA landscape also make him an invaluable resource to institutional compliance teams struggling to comply with the shifting regulatory landscape. No task is too small – or too big. Indeed, Eric and his team have helped build TCPA-compliant systems and processes for some of the largest and most complex corporate entities in the country. He commonly works with in-house compliance counsel to build and implement enterprise and business-line specific TCPA solutions, performs TCPA audits and drafts and reviews proposed TCPA policies and procedures. He and his team also have the technical expertise necessary to assist call centers seeking to develop TCPA-resistant call path architecture or to modify existing telephony and software integration to better insulate from potential TCPA exposure. Eric has built a reputation for thought leadership. An avid blogger and speaker, he has been at the forefront of the industry’s effort to push for clarity and a return to sanity for the TCPA for years. He was selected to advocate for the financial services industry on important TCPA issues before the Federal Communications Commission and co-authored the nation’s only comprehensive practice guide on TCPA defense. In his spare time, Eric leads defense teams representing banks and other financial services companies in consumer finance litigation matters. He has experience representing clients in UCC, TILA, RESPA FCRA, CCRA, CLRA, FDCPA, RFDCPA and FCCPA claims, as well as in fraud and bank operations issues.

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