When AI Becomes a Liability: Hallucinated Case Law, Sanctions, and the Privilege Waiver Risk

By William C. Wagner on July 9, 2026

AI Ethics and Laws for Balancing Artificial Intelligence (AI) and Safety. Developing AI codes of ethics. Compliance, regulation, standard , business policy and responsibility for privacy data.

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.

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