Documents a criminal defendant generated with the public version of Claude were not privileged, not work product, and not protected — even though he had pasted in information his own lawyers had given him. That February 2026 ruling by Judge Jed Rakoff in the Southern District of New York, followed by ABA Formal Opinion 512 and California's first-in-the-nation SB 574, has converted attorney-client privilege from a legal status that attached automatically into a technical control that survives or fails based on the vendor's terms of service, whether counsel directed the use, and whether the firm can produce the paperwork. Clio's 2026 survey found 75% of small firms using AI and 55% with no policy at all. AI in Its Place is the free weekly newsletter that translates peer-reviewed research into finance, security, and governance moves you can make this quarter. Subscribe and get this week's issue: why privilege is now a control, and the six moves small firms can make before a court or state bar asks to see the file.
Written by David Mosher—PhD candidate in Cybersecurity Management and former Microsoft leader—for the SMBs and MSPs navigating real AI adoption.

Subscribe and this week you'll get:

• The Heppner Rule — how a federal court held that AI-generated documents get no privilege and no work-product protection, even with privileged input pasted in

• What the Research Actually Says — peer-reviewed scholarship from Jurimetrics, the Harvard Law Review, and the University of Dayton Law Review on where privilege now lives

• Consumer vs. Enterprise — why the terms of service are the fulcrum of the privilege analysis, not an IT procurement preference

• The Six Moves — inventory, data-flow policy, six vendor questions, engagement-letter fix, citation verification, and the defensibility record

• What Small Firms Can Do — the reasonable-efforts process that ABA Rule 1.6(c) actually requires, without a 20-person compliance team

Every issue is grounded in primary research — no vendor hype, no fluff.