Shadow AI in law firms: what you need to know
As law firms embrace generative AI to streamline workflows, the rise of shadow AI poses new threats to client confidentiality and regulatory compliance. Extech Cloud highlights how law firms can tackle this issue, while still safely harnessing the power of AI
Law firms are increasingly using generative AI (genAI) for tasks like drafting contracts and client communications. Tools like ChatGPT offer speed and efficiency, but when used without approval, they can expose sensitive data to third-party platforms.
This is the risk of shadow AI, where unapproved AI use threatens confidentiality and compliance. If your firm hasn’t addressed it, now’s the time to act.
What is shadow AI?
Shadow AI is the use of generative AI tools like ChatGPT within a law firm without approval from IT or compliance teams.
It’s similar to shadow IT, where staff use tools like Dropbox without oversight. But with AI, the risks are greater, especially in legal settings where confidentiality and compliance are critical.
Legal professionals may unknowingly input sensitive data into AI platforms that lack proper privacy controls. That data could be stored, reused, or even leaked, depending on how the platform handles it.
Why shadow AI is a legal risk
You don’t need to be a cybersecurity expert to see the risks. Shadow AI can expose client data, breach confidentiality, and violate GDPR or SRA rules.
Without oversight, there’s no audit trail, making it hard to track or respond to breaches. Sensitive legal data may even end up training public AI models, posing serious legal and reputational risks.
Why banning AI isn’t the answer
Blocking AI tools may seem like a solution, but it rarely works. Legal teams will find workarounds, increasing risk.
Shadow AI isn’t careless; it’s a way to work smarter. The answer isn’t restriction, but secure, approved alternatives.
A smarter solution: Microsoft 365 Copilot for law firms
Instead of banning AI, offer a secure alternative your team can trust. Microsoft 365 Copilot integrates with familiar tools like Word and Outlook, keeps data private, and supports GDPR compliance. IT teams stay in control while legal professionals work smarter—securely and efficiently.
- Runs within Microsoft 365, respecting access and confidentiality.
- Keeps your data private and out of public AI training.
- IT teams control permissions, usage, and compliance.
- Built-in GDPR and regulatory compliance support with enterprise-grade security.
Closing the AI policy gap in legal practices
If your firm hasn’t created internal AI policies yet, you’re not alone. Many practices are just starting to define acceptable use and may not realise how widely consumer AI tools are already being used.
Here are a few key questions to help your firm assess its current position:
- Where are legal professionals using AI tools, and for what tasks?
- Are you comfortable with the data being entered into those platforms?
- Do you understand how that data is stored, and whether it’s exposed to training cycles?
- Have you provided a secure, approved alternative that’s easy to access?
Answering these questions can help surface blind spots and lay the foundation for a robust internal framework that protects your firm and your clients.
AI can accelerate legal work safely
AI can boost productivity in law firms but only with the right safeguards. Tools like Microsoft 365 Copilot offer secure, compliant AI use.
Planning a wider digital shift? Explore our cloud migration and AI strategy guides, or contact Extech Cloud to get support and secure your firm’s AI journey.
