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AI wealth advice: Lawyers warn of serious risks - CNBC
Displeased couple having problems during a meeting with their agent in the office.Skynesher | E+ | Getty ImagesA version of this article first appeared in CNBC's Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.Lawyer Tasha Dickinson said she gets calls every week from clients asking about legal advice they got from ChatGPT, Claude or another artificial intelligence chatbot. Some don't admit it, but she can tell from their line of questioning, she said. One client, a high-net-worth Florida resident, asked Dickinson about creating a community property trust — an attractive option for married couples — saying he got the suggestion from AI to save on taxes for his heirs, she said. Dickinson quickly pointed out a problem: The client's wife had recently died."I said, 'Well, you do understand that a community property trust is between husband and wife, right?' And there was silence on the phone," said Dickinson, a partner at Day Pitney. "'They're like, 'Oh, well, AI thought it was a good strategy.' Well, like, in the universe, maybe it's a good strategy, but it's not a good strategy for you."Lawyers to the wealthy told Inside Wealth that their clients are increasingly using AI not only to research tax topics but to second guess their lawyers' advice. While some lawyers said AI helps clients come up with informed questions and learn basic concepts, they also say it poses a headache and legal risks.Robert Strauss, partner at Weinstock Manion, said several clients have uploaded trust documents to AI systems and come back with a list of questions and suggested edits, forcing Strauss to defend his work and explain why the AI recommendations aren't appropriate for the client's situation."The questions are fine, but it results in spending more time on the matter than we would ordinarily spend," he said. "We end up spending two, three, four hours of time dealing with stuff that so far has amounted to nothing. I have not actually received a single workable suggestion from that process."The result, he said, is a lack of trust on the part of the client in their lawyer.What's more troubling, Strauss said, is that clients are sharing sensitive information with large-language models, raising data privacy concerns and legal pitfalls. Strauss said his firm is currently revising their client contract to warn clients that using AI chatbots like this can void attorney-...
The Hidden Legal Risk of Free AI Tools in Your Law Practice
Think of this: You're working late on a busy day evening, trying to finish a settlement agreement for a high-value client. You need to summarize complex financial records quickly. You open ChatGPT or other tools —the free version you've been using for months—and paste in the client's confidential bank statements, transaction history, and settlement terms. Within seconds, you get a clean, well-organized summary. You copy it into your draft. You send it to the client. The deal closes. What you don't realize is that everything you just entered—your client's name, their financial details, the settlement terms—may now be stored on AI's servers. Worse, depending on the version you're using and your privacy settings, that data could be used to train future versions of the AI model. You've just violated attorney-client confidentiality. And you didn't even know it. This is happening in many law firms right now. Across the world, lawyers are using free AI tools without understanding the hidden legal risks buried in the terms of service. What Most Lawyers Don't Know About Free AI Tools Free AI tools like ChatGPT, Claude, and Google Gemini are incredibly powerful. They're fast, accessible, and easy to use. But here's the part most lawyers miss: free doesn't mean safe. When you use a free, consumer-grade AI platform, you're not the customer—you're the product. These companies make their tools free because they use your inputs to improve their models. That means the confidential client information you enter could be stored, analyzed, and potentially reused. Let me be clear: this isn't a conspiracy theory. It's in the terms of service. The problem is, almost no one reads them. According to recent ethics opinions from state bars across the United States, lawyers who input sensitive client data into publicly accessible AI platforms without understanding data retention policies may be violating their professional duty to protect client confidentiality. The Three Hidden Risks in Your Terms of Service When you use free AI tools for legal work, you're exposing your firm to three major risks: 1. Data retention and model training Most free AI platforms reserve the right to retain your inputs and use them to train future models. That means the contract you drafted, the case summary you generated, or the legal memo you created could become part of the AI's training data. Even if the platform claims your data is "anonymized," research has shown that large language mod...
United States v. Heppner: Use of Generative AI Can Waive Privileges ...
In United States v. Heppner, [1] Judge Jed Rakoff of the United States District Court for the Southern District of New York held that a criminal defendant's use of generative artificial intelligence ("AI") can waive attorney-client privilege and work-product protections because the AI tool is not an attorney and use of the AI tool constituted a third-party disclosure. The decision is ...
When AI meets privilege: What foreign courts are telling us about the ...
The legal profession's relationship with artificial intelligence is evolving rapidly, and not always smoothly. Courts around the world are now raising a more fundamental question: can the use of public AI tools compromise solicitor-client privilege? Morgan Camley, KC, Kay Scorer and Liam Edmondstone examine emerging foreign court decisions and what they may mean for privilege and ...
