Earlier this week, Mode.Inc, a consumer tech company from Chicago known for acquiring mobile apps and compensating users for their data, introduced BizBuyData.com. This new platform is marketed as a potential revenue source for law firms, allowing them to license their "historical operational records" to AI labs. These labs use the data to train workplace agents, providing firms with a way to monetize past work without accruing debt or diluting equity.

Operational records, as defined by Mode, include internal messages, emails, and project histories that demonstrate the decision-making processes over time within firms. This data is particularly valuable as it shows how legal professionals navigate complex issues and strategies.

However, this raises a significant ethical and legal red flag: are these operational records not protected under attorney-client privilege? The detailed discussions within a litigation team, strategies, and client-specific information are precisely the materials protected under legal privilege.

Mode suggests that it has developed tools to anonymize sensitive information, allowing firms to review and approve the data before it is shared. Yet, legal experts argue that simply removing names or other identifiers does not strip a document of its privileged nature. Confidential communications remain protected under the American Bar Association’s Model Rule 1.6, which requires a client's informed consent before their information can be used in new technologies, let alone sold.

Further complicating matters, there is no expiration on these privileges. Legal precedent affirms that privilege remains intact indefinitely, even post-mortem, as seen in landmark cases like Swidler & Berlin v. United States. Additionally, recent rulings, such as one by U.S. District Judge Jed Rakoff, emphasize that sharing privileged information with third parties, including AI systems, constitutes a waiver of that privilege.

Mode's CEO, Dan Novaes, acknowledges the uniqueness of the data, stating that AI labs cannot simply scrape this type of information but must acquire it through licensing. He argues that the company's process allows firms to verify the scrubbed data before it is used. Yet, the core issue remains: auditing does not negate the breach of client confidences.

The potential participants in this program are not limited to large firms; any law office with at least six employees using digital tools is eligible. Mode is also incentivizing referrals to the program, offering significant financial rewards, which may tempt smaller firms without robust legal oversight to participate.

Ultimately, even if a law firm meticulously filters out all privileged information, what remains (such as calendar entries and non-sensitive internal communications) may not even be of significant value for training sophisticated AI models. This initiative highlights a critical tension between technological advancement and the imperative to uphold legal ethical standards. The legal community continues to watch closely, balancing innovation with the inviolable rights to client confidentiality.