ARTICLE
13 July 2026

When AI Becomes A Liability: Hallucinated Case Law, Sanctions, And The Privilege Waiver Risk (Video)

TS
Taft Stettinius & Hollister

Contributor

Established in 1885, Taft is a nationally recognized law firm serving individuals and businesses worldwide, in both mature and emerging industries.
Artificial intelligence tools are transforming legal practice, but they come with significant risks that attorneys and clients must understand. A recent federal court decision found that using public AI chatbots may waive attorney-client privilege, while courts continue to sanction lawyers for AI-generated errors in filings. Learn what steps legal departments should take to protect privileged communications and maintain ethical standards when using AI technology.
United States Corporate/Commercial Law
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Artificial intelligence is reshaping how lawyers research, draft, and advise.

But AI has introduced two legal risks that users cannot ignore.

  • Courts are sanctioning attorneys for AI-generated errors in court filings.
  • And a February 2026 federal decision held that a client’s independent use of a public AI chatbot was not protected by attorney-client privilege.

This video explains both risks, outlines the decisions behind them, and identifies steps in-house counsel can take now, including AI-use policies and guidance for legal departments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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