Maybe you’ve done it already. You draft an agreement, drop it into an AI tool to “double check” the language, or ask it to summarize a deal before sending it out. It feels efficient. It feels harmless.
But who else might have access to that information?
A recent decision out of New York has prompted law firms across the country to start warning clients about how they use AI tools.
In that case, a federal judge ruled that communications with an AI platform were not protected by attorney-client privilege, meaning they could be used as evidence. In simple terms, if you share legal advice or deal strategy with a third-party platform, you may be giving up the protections that normally keep those conversations private.
This is not just a concern for high-profile litigation. We are seeing it show up in everyday business situations.
Clients are increasingly bringing AI-generated contracts or edits for review, uploading agreements into AI tools to “check” legal language, or asking AI to analyze deal terms, risks, or negotiation strategy. On the surface, that seems like a smart use of technology. But it can create unintended exposure.
For Example:
Imagine you are negotiating the purchase of a business in Mount Pleasant or leasing space along Coleman Boulevard.
You paste a draft agreement into an AI tool and ask where your risks are or how to negotiate better terms. That prompt may include pricing strategy, risk tolerance, deal structure, and internal business considerations.
If that information is later considered discoverable, it could give the other side insight into your thinking.
Attorney-client privilege is what protects confidential communications between you and your lawyer. It allows you to speak openly without worrying that those discussions will be used against you.
But that protection depends on keeping those communications confidential. Courts have made it clear that AI platforms are considered third parties, not legal advisors. Sharing legal advice with a third party can waive privilege, and simply sending AI-generated content back to your attorney does not restore that protection.
AI can still be a useful tool in business. The issue is not the technology itself. It is how and when it is used. For business owners, the goal is to be more intentional.
AI can make sense for general research, high-level explanations, drafting early non-sensitive language, or organizing internal ideas before involving counsel.
Caution is warranted when uploading contracts your attorney prepared, sharing legal advice or communications, discussing negotiation strategy or deal terms, or inputting confidential financial or operational details.
From our perspective, this is more about awareness and caution.
Businesses in Charleston and the Lowcountry often deal with real estate transactions in older or mixed-use developments, closely held company structures, and private business sales and partnerships. These situations involve strategy, timing, and negotiation. The kind of information you would not want broadly accessible.
A simple rule of thumb is this. If you would not forward it to a third party outside your deal, think twice before putting it into an AI tool. At Buxton & Collie, LLC, we are seeing these questions come up more often. We work with business owners to not only draft and review documents, but to think through how those documents are handled, shared, and protected throughout the process.
If you are reviewing contracts, negotiating a deal, or trying to understand how AI fits into your business operations, our team at Buxton & Collie, LLC is here to help.
We can walk through your situation and help you make decisions that protect both your business and your long-term goals.
Protect your business from start-up planning, financing and incorporation, to business sales.
