Privilege problems rarely begin in court. They often start with routine business communications: a quick internal email, a board note, a forwarded legal advice, or a prompt uploading that advice to an AI platform. At the time, these may feel harmless. In a later dispute, they can become evidence of what the business knew, considered and worried about.
Privilege can be the deciding factor between winning or losing a case as it determines whether relevant sensitive documents must be disclosed to the other side. Privilege however only protects confidential material. As businesses increasingly turn to AI platforms to analyse sensitive material, they risk creating a new route through which confidentiality (and privilege) may be lost.
Privilege: The Basics
There are two main types of privilege. Legal advice privilege protects communications between lawyer and client made for the main purpose of seeking or receiving legal advice. Litigation privilege is broader and extends to communications with third parties created for the conduct of ongoing or reasonably contemplated litigation.
Crucially, documents created mainly for commercial purposes may not be privileged, even if they include legal input, for example, project updates or board materials. Privilege also depends on confidentiality: sharing material too widely may destroy both confidentiality and privilege.
AI, Confidentiality and Privilege Risks
Regulators in England and Wales and Singapore have warned that AI use can create confidentiality risks where sensitive information is retained, processed or used for training.
For example, a CFO uploads legal advice on an M&A deal to a free public chatbot to test whether the deal can be made more tax efficient. The advice has not been deliberately shared outside the company, but if the platform’s terms allow the provider to keep or reuse it, privilege will be undermined if confidentiality
has been lost.
In Munir v Secretary of State for the Home Department [2026] UKUT 81 (IAC), the UK Upper Tribunal observed that entering confidential documents into an open-source AI tool such as ChatGPT placed that information in the public domain, breaching confidentiality and waiving privilege, unlike closed-source tools such as Microsoft Copilot.
The US position is less settled. In United States v Heppner, privilege was denied because the AI platform was treated as a third party whose terms allowed data to be collected, used and disclosed. In Warner v Gilbarco, Inc., privilege was upheld because the platform was treated as a tool, not a separate recipient.
The practical takeaway is not to avoid AI altogether, but to understand the tool before using it for sensitive material. Businesses should first check the provider’s terms and settings before uploading confidential material to enterprise-grade systems. Anonymising confidential material may not be enough when using public AI tools if it can still be identified from the surrounding context.
Aabar: Privilege Without Direct Lawyer Involvement
The same discipline is needed when legal advice is shared within the business. English law takes a narrow view of who the “client” is for the purposes of legal advice privilege, generally protecting only communications between the lawyer and a defined group of employees authorised to seek and receive legal advice on behalf of the organisation (Three Rivers District Council and others v Governor and Company of the Bank of England (No 5) [2003] EWCA Civ 474) (“Three Rivers”).
Accordingly, privilege may be lost if material is shared outside the authorised client group, even if it is only circulated internally within the organisation. Take a common example – a board pack summarising legal advice on a deal is sent to the full board, several managers and outside advisers. Privilege falls away the moment the advice travels beyond the authorised client group.
The recent English High Court decision in Aabar Holdings S.A.R.L. and others v Glencore Plc and others [2026] EWHC 877 (Comm) (“Aabar”) clarifies the scope of legal advice privilege by confirming that communications and documents exchanged within the authorised client group may still be privileged if their dominant purpose is to seek legal advice, even if no lawyer is directly involved. This can cover preparatory notes, internal emails and material used to frame questions for lawyers, even where it was never meant to reach one.
Aabar should not be read as permission to circulate privileged materials more broadly internally. The Three Rivers’ narrow definition of the “client” remains unaltered, and protection is likely to be lost once material is shared more widely beyond the authorised client group.
Practical Steps to Protect Privilege
Privilege is easiest to protect at the point when a document is created, not once a dispute has begun. A few simple habits go a long way towards keeping it intact:
DO
• Identify early and keep a clear record of who is authorised to seek and receive legal advice.
• Restrict sensitive communications to that group, using targeted distribution lists and controlled folder access.
• Keep board minutes factual and high level. Circulate detailed legal advice separately.
• Treat public AI platforms as external third parties and use only approved enterprise systems.
DON’T
• Assume a document is protected because it refers to legal issues or copies a lawyer.
• Share legal advice beyond the authorised client group.
• Mix legal advice with commercial discussions or embed it in wider reports without considering audience and purpose.
• Expect privilege to arise retrospectively through later legal involvement.
• Use public AI platforms or external transcription tools in ways that compromise confidentiality.
Conclusion
Privilege is powerful but fragile. It is not secured simply by copying a lawyer or marking a document “privileged”. What matters is how the information is handled: who is involved, why it is created, whether confidentiality is maintained and how widely it is shared.
Privilege is far more likely to hold if sensitive material is handled carefully from the start. If it is handled casually, privilege can be lost before anyone realises there is a problem. A short look now at how legal advice is sought, used, shared and stored is always easier than trying to recover privilege once it has been lost. Feel free to reach out if you want to pressure test how your teams handle privileged documents.
