Artificial intelligence has already divided the business world into two camps: those using it and those rapidly falling behind. For employers, executives and professionals, refusing to use AI is no longer prudence but commercial self-sabotage. AI can accelerate research, improve drafting, expose weaknesses in an argument and reduce the time required to make difficult decisions.
Two Significant Legal Risks
But its ease of use has created a dangerous illusion: that typing into an AI platform is the digital equivalent of thinking out loud. It is not. The prompts an employer enters, the documents it uploads and the answers it receives may become evidence in litigation. Worse, inserting legal advice or confidential communications into an open AI platform may jeopardize solicitor-client privilege — the privilege courts afford to communications between lawyer and client to retain its confidentiality and avoid disclosure to the opposing side and to the court.
The seemingly private exchange taking place on a laptop today could become the most damaging exhibit in a courtroom several years from now. Two risks deserve particular attention: the inadvertent waiver of solicitor-client privilege, and the production of AI prompts and outputs during litigation.
Inadvertent Waiver of Solicitor-Client Privilege
Solicitor-client privilege is among the most jealously protected principles in Canadian law. It permits clients to speak candidly with their lawyers, secure in the knowledge that their communications will remain confidential. But privilege depends upon confidentiality. When protected information is voluntarily disclosed to an outside party, the privilege is waived.
The problems often arise innocently. A client receives advice from counsel and wants a second opinion. Or it wants an AI tool to simplify a legal memorandum, challenge the lawyer’s analysis or suggest a better settlement strategy. To obtain a useful response, the client supplies the facts. They may quote from their lawyer’s email, upload correspondence, describe settlement discussions or identify perceived weaknesses in the case. At that point, the user may have disclosed precisely the information the privilege was intended to protect.
U.S. Decision Offers Warning
Canadian courts have not yet provided guidance on whether using an AI in this fashion amounts to waiver. But a recent U.S. decision offers a warning. In that case, a litigant entered information received from his lawyers into an AI tool, used it to generate documents and then provided those documents to counsel for the litigation. The court concluded that disclosure to an open AI platform amounted to disclosure to a third party and that privilege had therefore been lost.
In employment cases, where an employer’s motive and decision-making process are often central, those risks are especially acute. The most damaging evidence in the next generation of employment cases may not be found in an email, text or memorandum, but in a prompt someone wrongly assumed no one would ever see.
