Recently, a federal court decision from the Southern District of New York has received a lot of attention. The decision tell us that certain AI‑related materials were not protected by attorney client privilege. Much of the commentary has centered on the technology itself. However, that focus is misplaced.

The court did not announce a new rule about AI. In fact, another federal court recently reached the opposite conclusion, protecting AI‑assisted litigation materials prepared at the direction of counsel as attorney work product. Taken together, these cases reinforce a familiar legal principle. Outcomes turn on process, not the tools being used.

The SDNY court applied long‑standing privilege law. The takeaway for business leaders is not about avoiding AI. It is about understanding what attorney client privilege actually protects and how easily it can be lost without clear governance.

What Attorney Client Privilege Actually Protects

Attorney client privilege is narrow. It applies only when all three of these communication conditions are met:

• Between a client and an attorney
• Intended to be confidential
• Made for the purpose of seeking or providing legal advice

If any one of these elements is missing, the communication is not privileged. Courts do not expand this doctrine to accommodate convenience, speed, or business efficiency.

In the SDNY case, the issue was not the use of AI. The issue was that the materials at question were not created as confidential legal communications directed by counsel. They were business materials generated outside of a legal workflow. As a result, the court treated them like any other non‑privileged business documents and ordered disclosure.

Why the Court’s Analysis Was Predictable

This analysis is consistent with decades of privilege law. Courts look at how information is created and handled, not how it is labeled later.

When employees analyze disputes, summarize facts, draft positions, or test arguments without legal direction, those materials are business records. When sensitive information is shared broadly, routed through vendors or tools without confidentiality controls, or created before counsel is engaged, privilege may be waived before anyone realizes it.

AI does not change this analysis. It simply increases the volume and speed at which these mistakes can occur.

The Real Risk for Business Leaders

For business leaders, the takeaway is straightforward. Privilege is protected by systems, not intentions.

Organizations that rely on informal practices such as looping legal in later, marking documents as privileged, or assuming internal materials are protected face real exposure in litigation. Courts expect businesses to recognize when an issue becomes legal, involve counsel at that point, and control how information is created and shared from then on.

Without that discipline, discovery will surface materials you assumed would never see daylight.

What to Put in Place Now

To protect attorney client privilege in an environment where AI is increasingly embedded in day‑to‑day operations, companies should focus on process and governance, including:

• Clear rules for when legal counsel must be involved, particularly around disputes, investigations, regulatory matters, and high‑risk decisions
• Defined workflows for legal communications so fact gathering, analysis, and strategy are conducted at the direction of counsel and treated as confidential from the start
• Thoughtful limits on how sensitive issues are documented, including where they are stored, who has access, and which tools may be used
• Training for leadership and key employees on what privilege protects and, just as importantly, what it does not

Process Still Wins

Courts are not hostile to modern tools. They are largely indifferent to them. The definition of attorney client privilege has not changed, nor has the responsibility of businesses to protect it.

In an AI‑dominated world, the companies that fare best in litigation will not be those with the most advanced technology. They will be the ones with the most discipline around legal process. Structure, clarity, and knowing when legal rules apply before you need them will continue to prevail.

A Practical Next Step for Business Leaders

If your organization is adopting AI tools or rethinking how information flows through the business, now is the right time to examine whether your legal processes are keeping pace. A proactive review of privilege practices, legal workflows, and internal governance can help reduce risk long before a dispute arises.

Equinox works with business leaders to bring clarity to these moments and to help ensure that innovation does not come at the expense of legal protection.

If you would like to explore how your current processes hold up, we welcome the conversation.