Does using AI destroy attorney-client privilege?

It depends on who is using the AI and under whose direction. The Heppner ruling (SDNY, February 2026) specifically addressed client-directed, independent AI use. When a client independently opens ChatGPT or Claude and creates documents to prepare for a meeting with their attorney — without attorney direction — those documents are not privileged. The court found that using a consumer AI platform voluntarily shares information with a third party, breaking the confidentiality that privilege requires. Attorney-directed AI use — where you control the tool and deploy it as part of rendering legal advice — has a stronger privilege argument under the Kovel doctrine.

What is the Heppner ruling on AI and privilege?

United States v. Heppner (SDNY, February 17, 2026) is the first federal ruling establishing that AI-generated documents a client creates independently are not protected by attorney-client privilege. Bradley Heppner created 31 documents using Anthropic's Claude to prepare for discussions with his attorneys after his arrest on fraud charges. When prosecutors sought those documents, Judge Jed Rakoff ruled they were not privileged. The court's reasoning: attorney-client privilege requires confidentiality. Using a consumer AI platform voluntarily shares information with a third party. That act waives the confidentiality requirement. Work product protection also failed because the documents were not prepared by or at the direction of an attorney.

Should I update my engagement letter because of the Heppner AI ruling?

Yes. Your engagement letter is the right place to establish AI governance expectations from the beginning of a client relationship. Add one paragraph covering three things: (1) your firm's AI use and how you govern it; (2) that clients should not use AI tools to create documents related to their legal matter without discussing with you first, because courts have found this may affect privilege protections; (3) that AI tools you deploy under your supervision as part of rendering legal advice are governed differently. One paragraph added to your existing letter gets this done.

Do accountants and consultants need to worry about the Heppner AI privilege ruling?

Yes, though the direct impact is on attorneys. The underlying principle — that independently sharing confidential information with a third-party AI platform may have privilege consequences — extends beyond attorney-client privilege. Accountants working on matters with litigation exposure should be aware that the same analysis may apply to any privilege claim. Consultants working on regulatory investigations or potential litigation face similar questions. The specifics vary by jurisdiction and professional context, but the core principle is consistent: the AI tool is a third party, and using it independently without professional direction creates risk.

AI and Privilege: The Heppner Ruling (2026)

Published: March 13, 2026 | By: The Crossing Report | 7 min read

Summary

On February 17, 2026, a federal judge in the Southern District of New York issued a ruling that changes how every attorney needs to think about client AI use. In United States v. Heppner, Judge Jed Rakoff ruled that 31 documents a client created using Anthropic's Claude to prepare for meetings with his attorneys were not protected by attorney-client privilege.

This is the first federal ruling of its kind. Multiple major law firms have already issued client alerts. Here's what your small firm needs to know — and three concrete steps to take this week.

What the Court Actually Decided

The core of Judge Rakoff's ruling comes down to one principle: attorney-client privilege requires confidentiality, and sharing information with a third-party AI platform breaks it.

When a client independently uses a consumer AI tool — without attorney direction, without attorney involvement — to generate documents, the client has voluntarily shared their information with a third party. That act of sharing waives the confidentiality requirement that privilege depends on.

The court's specific finding: "AI is not legal counsel." A consumer AI chatbot owes users no duties of loyalty or confidentiality. The platform retains the right to use that data. By using it, a client has made an independent choice to involve a third party in their legal matter — a choice the attorney did not direct and may not have known about.

The work product doctrine failed for the same reason. Work product protection covers materials prepared by or for an attorney in anticipation of litigation. The 31 documents were prepared by Heppner, independently, using a consumer tool. The attorney wasn't directing the work and wasn't yet involved.

The practical implication: If your client opened ChatGPT, Claude, or any other consumer AI tool, used it to generate notes, talking points, or analysis about their legal matter, and brought those materials to a meeting with you — those materials are not protected. A court can order them produced.

The Kovel Exception — The Path to Privilege That Still Works

The Heppner ruling does not say all AI use in legal matters destroys privilege. It says client-directed, independent AI use does. There is an important distinction the court preserved.

The Kovel doctrine (established in a 1961 Second Circuit case) allows third parties to participate in attorney-client communications when the attorney directs their involvement to facilitate legal advice. The classic example: an attorney hires an accountant to translate complex financial information so the attorney can advise the client. The accountant's involvement doesn't break privilege because the attorney is directing the engagement.

The Heppner ruling explicitly acknowledges this framework applies in the AI context. Attorney-directed AI use — where you control the tool, direct how it's used, and deploy it as part of rendering legal advice — has a much stronger privilege argument than client-initiated use.

The relevant distinction for your practice:

Client-directed AI (not privileged): Client uses ChatGPT or Claude to prepare questions for you, draft a timeline of events, research their situation, or organize documents before a meeting — independently, without your direction.

Attorney-directed AI (potentially privileged): You use AI to analyze client documents, draft communications, research case law, or prepare strategy memos. You are directing the tool as part of your legal work. The Kovel analysis may apply.

This distinction has immediate implications for how you communicate with clients and how you document your own AI use.

Three Steps to Take This Week

1. Send a Client Advisory

Your active clients need to know about this ruling. The risk is real: a client who uses AI to prepare for your meetings, then discovers in litigation that those materials are discoverable, has a legitimate question about whether they were warned. An advisory email creates a documented record.

The message doesn't need to be formal or lengthy. Three sentences is enough:

"A recent federal court ruling (United States v. Heppner, SDNY, February 2026) established that documents a client creates independently using AI tools to prepare for meetings with their attorney are not protected by attorney-client privilege. If you use AI in connection with your legal matter — to draft questions, prepare documents, research your situation, or organize information — please contact us before doing so. We want to make sure your communications remain fully protected."

Send this to active clients. It takes 20 minutes and creates a documented record. If your clients have matters in active litigation or potential litigation, this is urgent.

2. Update Your Engagement Letter

Your engagement letter is the right place to establish AI governance expectations from the beginning of a client relationship. Most engagement letters were written before AI tools existed in their current form. This ruling gives you a concrete, judge-backed reason to update them now.

Add one paragraph covering three things:

Your firm's AI use: If you use AI tools in your practice (and you should), state that you do and that you govern their use according to professional standards and data security requirements.
Client AI use: State that the client should not use AI tools to create, draft, or analyze documents related to their legal matter without discussing with you first. Provide the brief reason: courts have found that independent AI use may affect privilege protections.
Attorney-directed AI: Note that AI tools you deploy under your supervision as part of rendering legal advice are governed by the same privilege analysis as other professional tools you use.

One paragraph added to your existing letter. If you have a colleague you consult on practice management questions, this is a 30-minute conversation worth having.

3. Build an Internal Protocol for AI Use in Client Matters

For your firm's own AI use, the Heppner ruling reinforces a documentation practice worth building now: when you use AI tools as part of client work, note that the attorney directed the use.

This doesn't need to be elaborate. A line in the matter file — "attorney used [tool] for [purpose] under attorney supervision as part of [task]" — creates the factual record that distinguishes your use from the independent client use at issue in Heppner. If your AI use is ever scrutinized in a privilege dispute, contemporaneous documentation is what you want.

This is also a good moment to review which AI tools your team uses for client work and whether those tools have appropriate data handling policies. The court's ruling turned partly on the fact that Heppner used a "public-facing platform" — a consumer chatbot that retains data. Attorney-supervised use of enterprise AI tools with contractual data security guarantees is a meaningfully different factual situation. If your team is using consumer-grade AI tools with client confidential information, this ruling adds urgency to moving to business-tier tools with appropriate data handling terms.

Who Else Needs to Know

The immediate audience for the Heppner ruling is attorneys. But the underlying principle extends to other professional contexts.

Accountants working on matters with any litigation exposure should be aware that the same analysis may apply to privilege claims. Consultants working on matters involving regulatory investigations face similar questions. The specifics differ by jurisdiction and professional context, but the core principle is consistent: the AI tool is a third party, and using it independently without professional direction may have privilege consequences.

If your clients include attorneys or other regulated professionals, a note about this ruling in your own client communications is worth considering.

The Bigger Picture

The Heppner ruling is the first of its kind, but it will not be the last. Courts are writing the rules of AI-era privilege in real time.

The good news for small firm owners: the attorney-directed AI use your firm does is on the right side of this analysis. You're using AI as a professional tool, under your supervision, to deliver better legal services. That's exactly the fact pattern the Kovel doctrine was designed to protect.

What this ruling asks of you is to be explicit about that. Document the supervision. Update the engagement letter. Tell your clients what they should and shouldn't do. Three steps, none of which take more than an hour.

The attorneys best positioned in the AI era are the ones who get ahead of issues rather than react to them. This is a proactive move — and the kind of value that justifies a long-term client relationship.

Your Action This Week

Draft the client advisory email. Use the three-sentence template above, adapt it to your voice, and send it to active clients.

If you have clients in litigation or with matters where privilege might matter, send it today. If your practice is primarily transactional or advisory, send it this week.

This is the rare compliance task that's also a client relationship opportunity. You're the attorney who saw a federal ruling, understood what it meant for your clients, and told them about it before they discovered it the hard way.

Further reading: AI Attorney-Client Privilege and the Heppner Ruling: What Small Firms Must Do — full breakdown of the ruling, the Kovel doctrine, and a step-by-step action plan for small law firm owners.

The Crossing Report delivers weekly intelligence on AI adoption for professional services firm owners. Subscribe for weekly insights — free subscribers get the top 3 insights, premium subscribers get implementation guides, tool comparisons, and deep dives.

Your Client Used AI to Prepare for Your Meeting — And Now It's Not Privileged