The Hidden Legal Trap In Every AI Prompt Executives Type

InnovationAIThe Hidden Legal Trap In Every AI Prompt Executives TypeByMichael Ashley,Contributor.Forbes contributors publish independent expert analyses and insights. The author of many tech books, Michael Ashley covers AI and Big Data.Follow AuthorMay 13, 2026, 08:00am EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.It's becoming increasingly important to be careful how you use AI tools from the standpoint of the law.Deposit Photos“What antitrust concerns could our regulators bring up if tomorrow’s merger moves forward?” This is the question a CFO asks AI right before a major board meeting. Little does this well-meaning executive realize the legal exposure her query may have just created for her and her company.To appreciate how and why, let’s back up to discuss a recent ruling sending shockwaves through business and legal circles. It pertains to a case involving Bradley Heppner. In October of last year, a federal grand jury indicted the Texas financial executive who once ran GWG Holdings, a publicly traded company. Heppner was accused of defrauding investors to the tune of $150 million through self-dealing transactions across two companies clandestinely under his control.Here’s where AI comes in. As the law firm Venable explains, “After receiving a grand jury subpoena and retaining counsel, Heppner used Claude to prepare reports outlining potential defense strategies and legal arguments. He later shared those reports with his attorneys and asserted privilege over them.”Upon searching his home, the FBI seized Heppner’s AI-generated files along with his devices. When his counsel tried to assert attorney-client privilege and work product to keep the documents from the prosecutor, Judge Jed S. Rakoff struck down their assertion in United States v. Heppner, ruling from the bench for the government. Judge Rakoff’s rationale was that the AI documents lacked privilege for at least “two if not a...