Introduction
In recent months, we have seen an increasing number of materials and documents prepared with artificial intelligence (Al), from a matter summary, terms and conditions for a business sale, and a Statement of Claim pursuing over half a million dollars. In most, if not all, instances, no doubt Al can appear to be a cheaper and quicker option than retaining a lawyer. So why should you use a lawyer instead?
AI hallucinations
In Mr Jason Riley v Nuvei Australia Merchant Services Pty Ltd [2026] FWC 75, the Applicant admitted using a 'legally trained' AI tool to present his case. However, the Eair Work Commission noted that some of the references made by the applicant to particular legal principles or authorities may have been Al hallucinatiions and lacked any legal basis.1
In another case before the Fair Work Commission Reece Hoverd v M & JD Pty Ltd [2026] FWC 1013, the Applicant filed a general protections application claiming constructive dismissal. The applicant used AI tools to draft submissions, and consistently relied upon provisions of his contract and the Waste Managment Award 2020 which do not exist. Despite being warned by the Chambers of the Deputy President that he should not provide false or misleading evidence, the Applicant continued 'repeatedly displayed a disregard for facts and has relied on incoherent legal arguments in order to contrive a basis to claim compensation.'
Both cases above are recent judgments delivered in 2026, highlighting the danger of not misleading yourself, but also the Court or Tribunal, if AI is used without care.
For those who are preparing for or are in the midst of a proceeding, the Supreme Court of Victoria and the Victorian Civil and Administrative Tribunal issued guidelines and a practice note to provide guidance on how generative Al tools are to be used in proceedings. Notably, the Supreme Court's guidelines encourage self-represented litigants and witnesses who use generative Al to prepare documents to identify this by including a statement as to the Al tool used to prepare the documents. The Supreme Court also states that generative Al and Large Language Models create output that is not the product of reasoning. Nor are they a legal research tool. On the other hand, VCAT does not discourage the use of Al tools, but emphasised that such use must be carefully considered and undertaken within appropriate guardrails.
Legal Professional Privilege
Confidential communications and documents between a solicitor and client made for the dominant purpose of providing legal advice or use in current or anticipated litigation are protected by legal professional privilege. Where the privilege applies to a particular communication or document, that communication or document is not required to be disclosed in the proceeding.
However, legal professional privilege can be waived (even if inadvertently) if the party acts in a way that is inconsistent with the privileged communication or document remaining confidential.2 This can include where the substance, gist or conclusion of the advice is published or communicated to a third party.3 We have published an article on When is legal privilege waived?, which explains this in more detail.
While it may look far from relevant to most people, an unintended waiver of the legal professional privilege or, worse, the lack legal professional privilege in the first place, could result in significant consequences. In United States v Heppner,4 after receiving a grand jury subpoena, Heppner became aware that he was the target of a criminal investigation. Heppner used Claude (a generative Al program developed by Anthropic) to prepare reports that outlined defence strategy and his arguments with respect to the facts and the law. Those outputs from Claude were shared with and influenced Heppner's counsel's strategy.
Shortly after, the FBI executed a search warrant at Heppner's home, and seized electronic devices containing approximately 31 documents of exchanges between Heppner and Claude. When the prosecution sought those materials, Heppner asserted privilege over them. The Court held that written exchanges between Heppner and Claude were not protected by attorney-client privilege - the documents lack elements of the attorney-client privilege, including that:
- they were not communications between Heppner and his counsel,
- they were not confidential because Claude is a third-party Al platform and its privacy policy stipulates that Anthropic collects data on both users' inputs and Claude's outputs to 'train' Claude, and
- that Anthropic reservices the right to disclose such data to a host of 'third parties', including 'government regulatory authorities'.
Uploading legal advice and documents to an AI platform can also amount to a waiver of legal professional privilege. The UK Upper Tribunal's decision in UK v Secretary of State for the Home Department [2026] UKUT 81 expressly ruled that '... to put client letters and decisions from the Home Office into an open source AI tool, such as ChatGPT, is to place this information on the internet in the public domain, and thus to breach client confidentiality and waiver legal privilege...'5
Although both Heppner and the Upper Tribunal of the Immigration and Asylum Chamber are not Australian cases, they shed light on how the use of AI can affect a legal matter. Disregarding them could be detrimental.
Replacing your lawyer with AI?
Most of the main generative AI platform's privacy policies allows the developer to collect personal data and communication and interactions between user and the AI platform, and to disclose them for law enforcement and other purposes.
What this means is that, not only may outputs from generative AI be hallucinating and incorrect, uploading documents or legal advice to generate AI platforms may further jeopardise your interests by waiving legal professional privilege, resulting in those information and documents capable of becoming eviddence. Staying away from your lawyer and siding with your favourite AI may not be the best idea.
After all:
How Sharrock Pitman Legal can help
As AI platforms become ever flooded with data, its becoming trickier to know whether the response generated is accurate, reliable and real. Your legal issue is particular to you so it is important to receive legal advice that is trustworthy, accurate and reliable, and addresses the issues particular to your legal problem.
Contact our Accredited Specialist Commercial Law team if we can assist you on email sp@sharrockpitman.com.au or 1300 205 506.
Disclaimer
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
Liability limited by a scheme approved under Professional Standards Legislation
References
1 Mr Jason Riley v Nuvei Australia Merchant Services Pty Ltd [2026] FWC 75
2 Mann v Carnell (1999) 201 CLR 1, [28]
3 Switchcorp Pty Ltd v Multiemedia Ltd [2005] VSC 425, [21]
4 See https://storage.courtlistener.om/recap/gov.uscourts.nysd.652138/gov.uscourts.nysd.652138.27.0.pdf#page=?. Also see https://havardlawreview.org/blog/2026/03/united-states-v-heppner/.
5 https:\\caselaw.nationalarchives.gov.uk/ukut/iac/2026/81
Casey Chow is a Senior Associate in our Commercial Law team. Contact Casey on (03) 8561 3314 or email casey@sharrockpitman.com.au.
