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First-of-Its-Kind Federal Ruling Finds Use of Consumer AI Tool May Destroy Attorney-Client Privilege

Client Alert
February 17, 2026

On February 10, 2026, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York issued what appears to be one of the first rulings of its kind addressing whether materials created using a consumer AI platform can be protected by attorney-client privilege or the work product doctrine. In an oral ruling from the bench, Judge Rakoff held that documents generated by a criminal defendant using a commercial AI tool and later shared with counsel were not privileged, signaling that courts may treat consumer AI platforms as third parties for the purposes of determining the confidentiality of attorney-client communications.

The ruling sends a clear message that entering sensitive legal information into publicly available AI tools may jeopardize privilege protections, suggesting that even when AI-generated information is ultimately sent to an attorney a court may find that confidentiality of the information was waived because it was first shared with a third-party AI platform. As a result, even material that was explicitly created with the intent to assist counsel could still become discoverable in litigation, regulatory proceedings, or investigations if an AI platform was used to generate the material.

Judge Rakoff’s decision also emphasizes that the work product doctrine, which protects legal preparation and strategy developed in anticipation of litigation, may not apply when AI-generated materials are created independently by a client rather than at the direction of counsel. In this context, if an individual uses AI tools on their own initiative to analyze potential defenses or legal theories, that information may be treated as personal research rather than protected legal preparation under the work product doctrine.

The significance of this decision also lies in its treatment of consumer AI tools as potential third-party disclosures. The court relied in part on the terms and disclaimers of the AI platform that was used, which stated that user inputs were not confidential, reinforcing the view that submitting privileged information into an AI platform may undermine claims of attorney-client privilege or work product protection. The court did not directly address the use of commercial “enterprise” AI platforms, which typically operate under agreements restricting access to user data to ensure confidentiality. However, the reasoning suggests that future privilege determinations may turn on whether an AI platform functioned as (or was intended to function as) a confidential extension of counsel’s work product or as an outside third party that received voluntary disclosures from a client or other related party.

This first-of-its-kind ruling represents an early judicial signal that the convenience of generative AI carries meaningful legal risk. Until clearer judicial standards develop, the safest approach is to treat consumer AI tools as external third parties for confidentiality purposes and to always involve legal counsel before using them in connection with any legal matter, dispute, or investigation.

If you have questions about how this ruling may impact your organization’s use of AI tools, please contact BMD Attorney Jeff Joseph at jajoseph@bmdllc.com.

AIArtificial Intelligence
Client Alert

OAAPN | Year In Review: 2026 Ohio Board of Nursing and Ohio Law Rules

February 9, 2026Find out key changes to Ohio law and the Ohio Board of Nursing rules that have directly impacted APRN practice over the past year, including Psychiatric Inpatient Documents, Intimate Examinations, Signature Authority, Duties Related to Fetal Death, Retail IV Therapy Clinics, Release from Permanent Restrictions, Disciplinary Action, Course on Drugs and Prescriptive Authority, Overdose Reversal Drugs, Office Based Opioid Treatment, Withdrawal Management for Substance Use Disorder, Safe Haven Program, and more.Client Alert

Ohio House Bill 537: Proposed Regulations for Midwives and Birthing Centers

January 28, 2026House Bill 537, introduced in the Ohio House of Representatives, proposes a comprehensive regulatory framework for certified nurse-midwives, certified midwives, licensed midwives, and traditional midwives. The legislation would clarify scope of practice, establish licensure standards, and impose new requirements for freestanding birthing centers and home births. Healthcare providers and facilities should be aware of the proposed changes and their potential operational impact.Client Alert

Proposed Health Information Privacy Reform Act Expands Protections Beyond HIPAA

January 26, 2026The Health Information Privacy Reform Act (HIPRA) seeks to extend privacy protections to health data not covered under HIPAA, including data collected by apps and wearables. HIPRA introduces broader definitions of protected health information, strengthens privacy and security requirements, establishes patient notification rights, and sets national de-identification standards. Companies processing health data should monitor developments to ensure compliance.Client Alert

Medicare Updates on Skin Substitutes: LCDs Withdrawn, Payment Changes Take Effect

January 23, 2026Medicare’s planned Final Local Coverage Determinations (LCDs) for skin substitutes were withdrawn in late December 2025, meaning previous coverage rules remain in effect. The 2026 Medicare Physician Fee Schedule introduces a single payment rate of approximately $127.14 for these products. Providers should review implications for diabetic foot and venous leg ulcer treatments.Client Alert

Understanding the Seven Core Elements of an Effective Healthcare Compliance Program

January 22, 2026The Affordable Care Act requires healthcare providers participating in Medicare, Medicaid, and CHIP to maintain an effective compliance program. Guidance from the Department of Health and Human Services and the Office of Inspector General outlines seven core elements that form the foundation of these programs, from written policies and compliance oversight to auditing, training, and corrective action. This alert highlights each element and explains how practices can tailor compliance programs to their size and risk profile while meeting federal expectations.
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