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Two primary doctrines protect the relationship between a client and attorney:
I’m sure all of you have heard of attorney-client privilege; it allows clients to speak with their lawyers honestly and without fear. Many of you may not have heard of the work-product privilege; this protects attorneys (and those working at their direction) so that the documents they prepare (including analyses, research findings, opinions, and conclusions) in connection with litigation is not discoverable by the opposing party.
An AI tool is not your attorney. Even if you pay to use the tool, unless it’s through an enterprise subscription, the AI tool is typically allowed to retain your data and train future models on it, and the company that owns the tool can disclose your inputs in response to discovery, injunction, or other legal process. Courts have been coming to the same conclusion. For instance, Judge Rakoff of the Southern District of New York recently ruled in U.S. v. Heppner that the 31 documents a criminal defendant generated through “conversations” with a consumer version of Anthropic’s Claude were neither privileged nor protected work product, even though the defendant had received information from his lawyers, fed some of it into Claude to develop defense theories, and then forwarded the outputs to his lawyers. The FBI seized the documents during a search of his home, and properly provided them to the federal prosecutors.
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At goodcounsel, we help clients think through whether and how to use AI tools in ways that protect — rather than undermine — their legal interests. That includes drafting AI use policies and updating documents to include AI restrictions. Contact us if you’d like to talk through what AI use looks like for your business and where the real risks lie.
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The Telephone Consumer Protection Act (TCPA) is the primary federal law governing how businesses engage with consumers through phone calls, text messages, and faxes. The TCPA includes limitations on the circumstances under which businesses may contact consumers (including how often and when) and may use an auto-dialer. Noncompliance can result in significant fines, including statutory damages of up to $1,500 per violation.
The TCPA applies whenever a company contacts a consumer via phone, text, or even fax. A company can also be held liable for violations committed by vendors (like telemarketers) that act on a company’s behalf.
The Supreme Court recently held, in McLaughlin Chiropractic Associates, Inc. v. McKesson Corporation, that courts are not required to follow the Federal Communications Commission’s interpretation of the TCPA. This decision expands the major questions doctrine, a relatively new legal theory that prohibits Congress from delegating questions of major political or economic significance to executive agencies without sufficiently clear and explicit authorization. The practical impact of the Supreme Court’s decision is an increase in litigation risk for businesses, given the potential for inconsistent rulings across states. Some of the key areas where courts may now diverge on TCPA include:
The answers to these and other questions may depend on the business’s geographic location. Potential side effects include businesses clustering in certain states, increase in forum shopping, and additional litigation.
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In this post, we address “dispute resolution” provisions in contracts, an often neglected but crucial part of the boilerplate at the end of contracts. (You know, that legal mumbo-jumbo you have always ignored.)
No one wants to think too much about dispute resolution, because no one wants to think there will be disputes. And, anyway, who even knows what a dispute will be about? All true, but there are important choices to be made about how disputes are handled, and they can make a big difference when parties cannot resolve issues on their own.
The decision usually boils down to litigation, arbitration, or mediation.
People are generally familiar with the concept of litigation. You go to the courthouse, a building filled with judges (many of whom, in Illinois and some other states, are elected). A judge is randomly assigned to your case and may not be experienced in the subject matter of your dispute. Before the matter can even be decided, “discovery” typically occurs. Discovery is the pre-trial process in which the parties request piles of information from each other, question or “depose” each other and any witnesses or experts, and typically argue a lot in front of the judge. It can be a lengthy, expensive, and frustrating process.
By contrast, arbitration is a form of private dispute resolution, and the parties may agree in advance to the terms of the process (in that provision you’ve always ignored). This can be as simple as agreeing on which arbitration forum will oversee the matter and proceeding under its standard rules. Or, the parties can specify the terms of the process in detail: the number of arbitrators and their required expertise (instead of a judge, you could have an industry expert who doesn’t even have a law degree!), the place of the arbitration, optional limitations on that costly discovery process, and so on.
Litigation and arbitration differ in important ways. Many clients are not aware that unlike judges, who are constrained by the rules of evidence, arbitrators may consider any evidence that they deem relevant. Arbitrators can issue awards based on their perception of fairness, and not necessarily on the established law (though consideration of prior arbitration decisions is becoming more common). Some clients might find this concerning. To others, it is refreshing. Don’t forget to factor in the cost of paying arbitrators; their compensation depends on how much time they spend, or work they do, on the case.
Moreover, unlike trial court decisions, the opportunities to appeal arbitration awards are limited unless an appellate process is agreed to beforehand by the parties. An arbitration decision can be challenged in court, but these challenges are generally only granted in cases of evident bias, fraud, corruption, or serious misconduct, and are not granted to overrule questionable reasoning of arbitrators. Those valuing faster adjudication and finality might prefer this; those desiring the safety valve of review by a higher court, beware.
Consider, also, that committing to arbitration as the dispute resolution mechanism in contracts may be less attractive following the Supreme Court’s recent decision in Smith v. Spizzirri. If a party brings its claim to district court instead of arbitration as is contractually required, the court must stay (instead of dismissing) the case. After staying a case, a district court will likely require periodic status reports and/or conferences with the parties, and after the matter is resolved, the case will become part of the public record. What this means for defendants is an increased chance of inconvenience and expenses and less confidentiality. Whether these and other differences are advantageous depends on factors such as the client’s risk profile and industry, the parties’ relative economic positions, how the client assesses the likelihood of dispute, and whether the client is more likely to be a claimant or defendant.
An alternative to litigation and arbitration worth considering is mediation, a non-binding process where a neutral third party helps the disputing parties reach a voluntary agreement. Unlike arbitration or litigation, the mediator does not decide the outcome but facilitates discussion and negotiation. Mediation can be faster, less adversarial, and more cost-effective than litigation or arbitration—particularly useful when the parties have an interest in preserving their business relationship. To ensure that that the parties rely on mediation, you must state this in your contracts; typically, parties decide to utilize mediation not as the exclusive dispute resolution mechanism, but as a first resort before investing in more costly and lengthy options like litigation and arbitration. Contact us if you have questions or want legal advice for your business. We can ensure that you are properly advised on the risks and benefits of the available dispute resolution mechanisms.
This blog post was drafted with help from Harris Lencz.
Categorised as: Dispute Resolution
These words, uttered by former FBI Director James Comey last month in response to a baseless federal criminal indictment brought against him, simultaneously sent a chill down my spine — and stiffened it. Comey, with these words, defies our president — a petty, vindictive autocrat determined to exact revenge on those he perceives as political enemies — and calls on all citizens to resist his abuses of power and office.
(This article nicely summarizes the history of the Comey-Trump relationship.)
It doesn’t take a highly trained lawyer to see that this indictment — for making allegedly false statements to Congress — is, to use legal terminology, a pile of horseshit.
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The “One Big Beautiful Bill Act” (still trying to accept that this is really the name) just sweetened an already pretty sweet QSBS tax deal.
Until now, you had to hold qualified small business stock (QSBS) for five years to get the famous 100% capital gains exclusion under Section 1202. Sell earlier than that? No soup for you!
Now:
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