Augmented Advocacy Series (Bermuda): AI and Legal Privilege

With that rise, it is crucial that lawyers assess the risks associated with sharing privileged information with AI tools, such as automated drafting services, chatbots and e-discovery tools.

This article explores the use of AI tools in connection with privileged information and the possible implications on disclosure in litigation.

Under English law, there are two primary categories of LPP: legal advice privilege and litigation privilege.

Legal advice privilege protects confidential communications between a lawyer and their client which occur for the purpose of giving or receiving legal advice.

Litigation privilege, on the other hand, applies to documents created or communications that occur specifically in the context of contemplated litigation.

The case R v Derby Magistrates’ Court ex p B [1996] 4 All ER 526 confirmed the importance of LPP as a fundamental right in the administration of justice and one that cannot be easily overridden.

LPP, however, can be lost or waived if the privileged information is knowingly shared with someone who is not a party to the privileged relationship.

AI tools have been increasingly integrated into legal practice due to their benefits in terms of efficiency and productivity. These tools may form part of an in-house system, which is controlled by an internal secure server, or an external system provided by a third-party vendor.

By using these AI tools, privileged information may be uploaded or input into these systems and in effect, shared with a party who is outside of the lawyer-client relationship.

This poses a crucial question: by sharing privileged information with AI systems, whether internal or external, is privilege waived or lost?

The Privy Council in B & Ors v. Auckland District Law Society (New Zealand) [2003] UKPC 38 recognised that privilege is not waived generally due to it being disclosed for a limited purpose.

Further, in Property Alliance Group Ltd v Royal Bank of Scotland Plc [2015] EWHC 1557 (Ch), it was found that privilege is not lost when confidential documents are shared on a limited basis.

Practically speaking, this means that privilege can be maintained, provided there is an express agreement between the privilege holders and the third party with which the confidential documents are shared.

In the context of litigation, the issue of waiving privilege may be raised if such privileged documents are shared with an AI system.

If a court determines that disclosure was made to a third party and that third party was not contractually bound by confidentiality provisions, LPP protection might be lost and the privileged information may be subject to an order for disclosure.

To mitigate the risks involved with sharing privileged information with AI systems, lawyers should take steps to ensure contracts are in place that hold a third-party service provider to strict adherence with confidentiality provisions.

Further, thorough vetting of AI service providers should occur to ensure data encryption is up to standard and data retention policies are reviewed.

It is also prudent to consider the option of using an in-house system, which affords greater protection by removing the need for third-party handling of data.

LPP remains a robust concept under English and Bermudian law that will continue to protect the lawyer-client relationship. The increased use of AI, however, poses risks to LPP protection.

The question of whether privilege is waived or lost when confidential information is used by AI tools depends on how well systems are vetted and secured by those who use them.

In exercising due diligence and providing contractual safeguards, lawyers can mitigate the risks posed by the use of AI on LPP.

First Published in The Royal Gazette, Legally Speaking column, January 2025