Court Rulings Highlight Legal Risks of Using AI for Business and Legal Queries

Executives routinely enter confidential business strategy and other sensitive information into AI tools. Two court rulings released on the same day in February 2026 illustrate how such use can create discoverable records in litigation. In one case, a financial executive used an AI tool to prepare reports outlining potential defense strategies and legal arguments after receiving a grand jury subpoena.

The executive shared those reports with attorneys and asserted privilege over them. A federal court ruled from the bench that the AI-generated documents were not protected by attorney-client privilege. The court found that three elements of attorney-client privilege were not satisfied.

There was no attorney-client relationship with the AI tool. There was no reasonable expectation of confidentiality when using the tool. The executive was not communicating with the AI for the purpose of obtaining legal advice, as the tool itself disclaims any ability to provide it.

As a result, materials seized during a search were not shielded from prosecutors. The decision means that prompts fed into AI systems can become discoverable documents that opposing parties may obtain through subpoenas to AI providers during litigation.

On the same day, a different federal court in Michigan reached a different outcome in an employment discrimination case. A plaintiff acting without a lawyer had used ChatGPT in preparing her claims. The court denied a defense motion to compel discovery of all materials related to that AI assistance.

That ruling turned on the work product doctrine rather than attorney-client privilege. Work product protection shields materials prepared in anticipation of litigation. Unlike attorney-client privilege, work product is waived only by disclosure to an adversary, and an AI tool is not considered an adversary.

A partner at Bridge Law LLP said the two decisions rest on longstanding legal principles rather than creation of new rules for AI. The attorney stated that courts continue to examine whether a lawyer was involved, whether confidentiality was preserved, and who had access to the information.

The rulings suggest that companies and executives should treat AI interactions as creating records that may later be subject to discovery. Entering strategic questions about potential mergers, regulatory concerns or other sensitive topics can generate material that opposing counsel might seek from AI companies.

The decisions do not establish blanket rules that all AI use waives protections. Outcomes depend on the specific facts and which legal doctrine applies. Future courts are expected to apply traditional analysis to determine whether privilege or work product safeguards remain intact.

Behavior in how AI tools are used, rather than the tools themselves, will determine whether sensitive material stays protected or ends up in discovery. Business leaders are advised to consider these factors when consulting AI on confidential matters.