US called it waiver; Canada calls it more complicated: here's what Heppner means for your clients
When a New York federal court ruled that a man charged with securities fraud waived his legal privilege by using an AI chatbot for feedback on his case, the legal profession here at home took notice. United States v. Heppner is framed as a cautionary tale, but Canadian lawyers shouldn’t treat the decision as a direct warning shot, says Robert Ben.
“Heppner effectively adopted a de facto bright line rule which says, if you're using consumer AI, that amounts to waiver of privilege,” explains Ben, partner at Thomson Rogers LLP. “That’s inconsistent with how privilege law actually works and would likely be applied in Canada. Here, it’s a more functional and less formalistic analysis. It's not about categories as much as answering the question, what is the tool being used for?”
In Heppner, the defendant used a consumer AI tool — Claude — on his own initiative, without direction from a lawyer, to generate documents outlining possible defence strategies and anticipated legal arguments, all of which he later shared with his lawyer. When the FBI seized the documents during a search, his lawyer asserted privilege. The New York District Court disagreed.
The court found the AI-generated materials were not protected by lawyer-client privilege nor by litigation work product privilege. On the first point, the reasoning was straightforward: lawyer-client privilege requires communication with a lawyer, and AI is not a lawyer. On the second, the court treated Heppner's AI use as equivalent to discussing the case with a third party, citing two key gaps: a lack of confidentiality and an absence of lawyer supervision.
The court pointed to Claude's own terms and conditions, which stated the platform would use inputs as training data for its large language model and that it had a right to disclose user date to “third parties” including governmental regulatory authorities. There were no assurances that the information would be kept secure.
This is a concern that extends beyond Claude and beyond the borders of the United States as seen from the fact that ChatGPT is currently under formal scrutiny by Canadian privacy regulators for its handling of personal data. All things considered, should the facts of Heppner amount to voluntary disclosure to a third party, which could waive privilege, in the Canadian context? It’s an open question, Ben notes.
Litigation work product privilege protects any materials created for the dominant purpose of litigation, even if prepared by a client. For example, a client prepares a summary document in support of their income loss claim. The test is whether the dominant reason for creating it is to aid in the conduct of litigation that’s ongoing or reasonably anticipated. If that’s met, then the work product is protected — regardless of whether a lawyer prepared it.
Canada also has a long history of jurisprudence that extends privilege to necessary intermediaries throughout the litigation process, such as translators or technical experts. Despite the involvement of these third parties, functionally they serve as agents of the lawyer in the context of the litigation. Communication or work product generated through those intermediaries meets the test for litigation privilege.
Ben argues that someone in the privacy of their own home using an AI tool to better understand a complicated legal issue they’re facing would likely meet the test, whereas a person on a crowded subway openly discussing legal advice they received would be at greater risk of an argument of waiver of privilege.
Ontario courts have consistently rejected bright line or categorical waiver arguments. They look more towards the intent of the client, the purpose of what they were doing, the expectation of confidentiality, and overall, consider fairness.
“The courts recognize that just because you've disclosed information to or through a third party doesn't automatically mean there's a waiver of privilege,” Ben says. “An Ontario court might view the Heppner decision as treating confidentiality too rigidly and narrowing work product privilege too much. Use of AI by a client to prepare for litigation or help frame questions they might ask their lawyer, would arguably fit quite comfortably within existing privilege doctrine in Canada.”
While Canadian courts haven’t ruled on AI and litigation privilege yet, it only stands to reason that it’s imminent. It’s currently being grappled with in other ways: for example, the courts are demanding transparency about AI involvement in proceedings. This sets the stage for the next logical step, where counsel ask clients in discovery whether they used chatbots to discuss or analyze their lawsuit — much like social media use became standard discovery territory once courts recognized its relevance to damages and credibility.
Ben turned his mind to AI’s impact on litigation privilege because he’s seeing a rise of its use by clients in his own practice. He understands the temptation for people unfamiliar with the legal system to turn to a generative AI tool, but people should be wary of sharing personal information such as legal, medical, and financial details.
Legal advice can be confusing, or sometimes simply not what the client wants to hear. But until there’s more clarity in the case law Ben advises clients to “assume that any self-initiated AI chats not directed by your lawyer on consumer tools are not private, confidential, or subject to any legal privilege, and that they very well could be producible if they're relevant.”
“If these AI interactions are discoverable by the opposing party in a lawsuit, they could be used against a client; depending on the circumstances, that could be disastrous,” Ben says, adding that it raised “a core question” for him: why are clients turning to AI in the first place?
Lawyers can play a role in mitigating the risk of AI tools becoming an issue in the first place by being proactive. Take the time to go through the complexities of the case and make sure they understand. Allow room for questions, set realistic expectations, and be timely in your responses. Encourage them to organize their thoughts or questions offline where possible, or better yet tell them to pick up the phone and call you directly.
Overall, as the professional with the expertise, ensure the answers and support you’re giving are satisfactory — don’t give your client a reason to look elsewhere.
“I don't want to sound unnecessary alarm bells because the Canadian courts, I expect, would take a more functional and practical approach than we see in Heppner,” Ben explains. “If the dominant purpose of the communication, tool aside, was for the litigation, it should attract privilege. But as lawyers, we need to err on the side of caution.”
