Artificial Intelligence (AI) is transforming business operations across industries, from automating processes to uncovering data-driven insights. According to our recent survey, AI usage in law firms has jumped from 47% in 2024 to 80% in 2025.
As adoption grows, so do the challenges around privacy and compliance. Businesses, especially law firms, are increasingly under scrutiny for how they collect, store, and use data through AI systems.
In this blog, we’ll break down the most pressing AI privacy concerns, share strategies to secure your data, and show how to move from reactive defenses to proactive AI governance.
Why AI Privacy Matters
Tech giants like Meta, Google, and LinkedIn have already faced backlash and lawsuits related to AI misuse, from data scraping and profiling to biased algorithmic decisions.
Client Trust
For law firms, client trust is everything. AI systems that mishandle, leak, or misuse sensitive data can breach attorney-client privilege and erode trust beyond repair.
Regulatory Compliance and Legal Risk
AI systems must comply with strict privacy regulations like GDPR, CCPA, HIPAA, and industry-specific standards. For law firms, non-compliance can mean disciplinary action, fines, and lawsuits.
Reputation
A single AI-related privacy incident can severely damage a firm's or business's reputation. Law firms, in particular, depend on their credibility and ethical standing; even the perception of carelessness with data can have long-lasting effects.
6 Most Critical Artificial Intelligence Privacy Concerns
The best way to avoid critical artificial intelligence privacy concerns is to educate yourself and your team on them.
Data Breaches
AI systems are attractive targets for cybercriminals due to the vast amounts of data they process.
A successful breach can lead to identity theft, regulatory fines, and irreparable brand damage. The more data an AI system handles, the bigger the target it becomes.
Data Misuse
Many law firms rely on third-party tools or vendors for AI-based services. Without tight controls, these vendors may repurpose data for training their models, putting client confidentiality at risk, violating both ethical obligations and contracts.
Black Box Models
Legal professionals need to understand how AI arrives at decisions, especially when it’s used to:
- Predict outcomes
- Suggest case strategies
- Assess risk
Black-box models offer little transparency, which is unacceptable in a field where accountability and reasoning are everything.
Lack of Transparency
Many AI tools do not clearly explain how they use or store data. If a tool scrapes, processes, or shares client data without your knowledge, your firm may be held liable. In one notable example, LinkedIn was sued for alleged AI misuse involving personal data scraping.
AI Bias and Hallucinations
Generative AI can produce biased or inaccurate content based on skewed training data or coding errors.
In legal settings, this could lead to inappropriate legal advice, wrongful conclusions, or even discriminatory practices in areas like employment or criminal law.
Compliance Risks
Law firms must comply with data privacy regulations like the GDPR, CCPA, PIPL, and even state-level Bar Association rules.
Failing to comply can result in regulatory fines, disciplinary actions, or loss of licensure.
Checklist to Secure AI Data
We see one of the biggest barriers to AI adoption is data privacy and security concerns. So, how can you leverage AI’s clear benefits while ensuring your business doesn't fall victim to artificial intelligence privacy concerns?
By following this checklist, you can secure your AI data.
1. Use Strong Encryption
Encrypt all client data, whether stored in your case management software, used in document review platforms, or shared with AI research tools. Secure encryption, both at rest and in transit, is essential for maintaining privacy and confidentiality.
2. Anonymize Sensitive Data
Before using client data in AI tools, even internally, anonymize it through masking or tokenization.
Techniques like federated learning and secure multi-party computation can enable AI use without exposing raw client information.
3. Adopt Explainable AI
Use AI tools that provide transparent, auditable decision-making. This helps attorneys understand the logic behind recommendations, crucial for defending decisions in court or explaining them to clients.
Examples of AI tools that use explainable AI include
- Casetext CoCounsel
- Kira Systems
- Luminance
- Lexis+ AI
- Westlaw AI
Explainable AI fosters trust and accountability and reduces the risk of unpredictable, biased, or legally noncompliant outputs that are commonly associated with black box models.
4. Perform Regular Compliance Checks
Stay aligned with global data privacy laws like GDPR and CCPA by:
- Conducting routine audits
- Maintaining clear documentation
- Openly communicating policies to users
This reduces legal exposure and builds consumer trust.
5. Implement Access Controls
Set role-based access permissions and monitor and log access activity to detect misuse. Limiting internal access helps safeguard against insider threats and accidental leaks.
6. Establish an AI Governance Framework
In our 2025 survey, we found that despite the growing adoption of AI, governance has not kept pace, with 53% of law firm leaders surveyed not having a formal AI policy.
Create clear AI governance policies, roles, and escalation procedures. Include
- Incident response
- Bias testing
- Ethical standards
- Data stewardship responsibilities
Members of your firm are most likely already using AI. It’s important to ensure that AI is developed and used responsibly.
7. Human Touch
While AI has come a long way, human oversight remains essential. Always have a qualified person review and validate AI-generated decisions, especially those that affect customer experience, legal standing, or business outcomes.
Moving Your Business from Reactive to Proactive
Most businesses only address AI privacy after an issue arises. But in today’s regulatory climate, that’s no longer enough. Proactive risk management is key.
Start by creating a culture of accountability around AI. Only 19% of firms surveyed in our 2025 Law Firm Survey Report said that they offer AI training.
Provide training to technical and non-technical teams, implement continuous monitoring practices, and make data privacy a shared responsibility.
Avoid Artificial Intelligence Privacy Concerns
AI can be a game changer, but only if deployed responsibly. The privacy concerns outlined above aren’t just technical hurdles; they’re fundamental business challenges.
By encrypting data, adopting explainable AI, performing compliance checks, and establishing governance, your organization can build AI systems that are secure, transparent, and ethical.
Future-proof your business and take control of your AI strategy before you face issues with clients or regulators.
For more insights on how to navigate technology in your legal practice, schedule a meeting with Tabush Group.
