The increasing use of AI in deal processes—such as analyzing term sheets and summarizing due diligence findings—raises concerns about discoverable evidence in litigation. As judges begin to rule on the intersection of AI and legal privilege, two recent cases illustrate contrasting outcomes. In United States v. Heppner, the court ruled that AI-generated documents weren’t protected by attorney-client privilege, emphasizing that the AI wasn’t a legal advisor and the materials lacked confidentiality. Conversely, in Warner v. Gilbarco, Inc., the court upheld the work product doctrine for AI-generated materials, viewing AI as a tool rather than a third party. These decisions highlight the need for M&A practitioners to proactively address AI’s implications by establishing clear policies on AI use, adding specific provisions in NDAs, and evaluating document retention regarding AI communications. The evolving legal landscape necessitates immediate action to safeguard sensitive information from potential disclosures.
