The AI Knows Too Much: When Employees Feed Trade Secrets into Generative AI Tools
April 14, 2026 —
Kazim A. Naqvi & John V. Mysliwiec - SheppardEvery time an employee pastes proprietary source code, a customer list, or a confidential business strategy into
ChatGPT,
Claude, or
Google Gemini, they may be quietly dismantling the legal protections that make those secrets worth protecting. Courts and regulators are only beginning to grapple with this problem, and right now, the burden of preventing it falls squarely on employers.
The Legal Stakes
Under the federal
Defend Trade Secrets Act (“DTSA”) and the
Uniform Trade Secrets Act (“UTSA”) as adopted across most states, a trade secret plaintiff must show that the information at issue was subject to reasonable measures to maintain its secrecy. Courts have historically credited measures like confidentiality agreements, physical access controls, and employee training—but those safeguards were designed for a world of thumb drives and disgruntled employees. They were not built for a world where a well-meaning engineer can, in seconds, transmit an entire corpus of proprietary data to a third-party AI platform operating under terms of service that may permit the provider to use inputs for model training.
Reprinted courtesy of
Kazim A. Naqvi, Sheppard and
John V. Mysliwiec, Sheppard
Mr. Naqvi may be contacted at knaqvi@sheppard.com
Mr. Mysliwiec may be contacted at jmysliwiec@sheppard.com
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Risks of Using an AI Chatbot for Legal Advice: Lessons from United States v. Heppner
April 08, 2026 —
Payne & Fears LLPImagine that you are an executive (who is not a lawyer) and are concerned about what your company plans to do is legal. You could call your lawyer who might bill you for the call. Or, you can ask your AI chatbot, such as Claude or ChatGPT, about the legal risk. The chatbot will likely compliment you on the incisive question, provide you with highly confident answer (that may or may not be right) and will not bill you on an hourly basis.
That is essentially what financial services executive Bradley Heppner did. It did not end well. A federal court recently ruled that Heppner’s chats with the AI tool Claude were not protected by attorney-client privilege or the work-product doctrine. That means that the other side (in this case, the federal government) could get access to his chatbot prompts, uploads and responses, and learn a great deal about, for example, whether Heppner knew what he was doing was illegal.
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Payne & Fears LLP
How AI Turns Construction Documents Into Procurement Intelligence
May 05, 2026 —
Aarni Heiskanen - AEC BusinessMEP equipment accounts for up to 40% of costs on data center or hospital projects, has lead times ranging from 20 weeks to over a year, and has historically been the most underserved area in construction software. In
this episode, I speak with Victor Muchiri from BuildVision about what it actually takes to make AI useful in construction procurement, not as a pilot, but in production.
We dig into why you cannot simply upload a set of construction drawings to ChatGPT and trust the output. Construction documents are complex, cross-referenced, and consequential. Without deep domain context, such as manufacturer ontologies, equipment taxonomies, and engineering expertise, AI produces plausible results, not reliable ones. BuildVision’s approach is to act as a harness around AI models, wrapping them in construction-specific knowledge so the output can be trusted for real procurement decisions.
Read the full story...Reprinted courtesy of
Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
Turnover Traps for Community Associations: Investigate First, Release Claims Later
April 14, 2026 —
Nicholas B. Vargo - Ball Janik LLPTurnover of a community association from developer control to owner control is a uniquely vulnerable moment. Developers are increasingly presenting Florida condominium and homeowners’ associations with “standard” settlement or release agreements at turnover, often being framed as routine steps to finalize the transition of control. In reality, these agreements can have sweeping consequences, including the release of construction-defect claims before the association has conducted any meaningful independent evaluation.
The developer has years of project knowledge and access to plans, subcontractors, and internal records. The newly elected board is just beginning to organize, obtain documents, and understand the property’s condition. Many defects, especially those involving roofing, waterproofing, windows, or structural components, are latent and not yet visible. Signing a release at this stage means the association is making a binding decision under conditions of uncertainty, without full information, to release all future potential claims.
Over the last few years, there has been a rise in reports of developers offering a packaged deal: they agree to complete certain repairs, often minor punch-list or cosmetic items, and to “forgive” an alleged financial deficit (often around $50,000) supposedly owed by the association from the developer-control period. In exchange, the association is asked to sign a broad release covering all claims, including known and unknown construction defects. To a new HOA board that received their community with limited operating and reserve funds, they are left with a difficult decision to either accept the developer’s offer or assess their owners to pay this alleged debt.
These agreements are occasionally presented through community management companies, which may describe them as “standard” or "routine.” Whether due to misunderstanding or influence from the developer, management companies can unintentionally reinforce the idea that signing is expected. Any recommendation provided to HOAs about whether to sign these releases could open community management to liability down the road. The best practice for both associations and community managers is to refer any agreements to be reviewed by general counsel for the association.
The following two case studies illustrate the real-world consequences:
Case Study One: A newly transitioned board relies on its management company to negotiate with the developer-builder to resolve irrigation issues, pond concerns, and signage deficiencies, along with forgiving an asserted financial shortfall. In exchange, the board signs a broad release covering all claims, including latent defects.
Within a year, several punch-list items remain incomplete, and more serious issues arise. When the association demands completion, the developer delays, prompting the association to seek advice on how to enforce the settlement agreement. The association hires counsel to hold the developer responsible for both the previously agreed-upon items and newly identified construction defects. However, when the association brings claims against the developer, the developer points to the release of all potential construction defects in the community. Thus, the only remaining remedy is limited to enforcement of the specific punch-list terms. The community, still relatively new, has no viable claims against the developer-builder for the construction defects. With warranties expired and the release, the association must fund repairs through special assessments, despite defects that would otherwise have been actionable.
Case Study Two: A community is presented with a similar agreement as above. The management company encourages execution, suggesting it is standard and even telling the board to “name your price.” The developer also pressures the newly elected board to sign.
Instead of signing, the board consults with their attorney. Counsel advises the board not to sign the release and recommends further investigation. Engineers are retained and identify early indicators of broader issues, including stucco cracking, water intrusion, and irrigation deficiencies. Based on this information, the association declines to sign the release. Subsequent evaluation reveals potentially significant construction-defect claims, allowing the community to pursue recovery that would have been lost under the proposed agreement.
These scenarios underscore a fundamental point: signing a release at turnover is not an administrative formality—it is a major legal decision. Board members act in a fiduciary capacity on behalf of their community, and their decisions can bind all current and future owners. At turnover, an association’s right is to investigate and pursue claims. Preserving that right until a full and independent evaluation is completed is not adversarial—it is responsible governance.
Accordingly, associations should retain independent evaluations of the property and consult qualified legal counsel before signing any “standard” agreements, especially ones involving a release of future claims.
Nicholas B. Vargo is a partner in Ball Janik LLP’s Construction Practice Group. He may be reached at nvargo@balljanik.com.
New Executive Order Prohibits Federal Contractors from Engaging in DEI Through Employment and Procurement Activities
April 27, 2026 —
Laura De Santos & Monica Prieto - Gordon Rees Scully MansukhaniOn March 26, 2026, President Trump signed Executive Order 14398, entitled Addressing DEI Discrimination by Federal Contractors, requiring federal agencies to add contractual language in all federal contracts prohibiting contractors and subcontractors from engaging in any racially discriminatory DEI activities, as defined by the Executive Order (EO).
While this EO includes language similar to prior DEI-related orders, it introduces a significant expansion in enforcement by subjecting non-compliant contractors to liability under the False Claims Act (FCA), including exposure to whistleblower actions and qui tam litigation. A qui tam claim is a civil action by a private individual on behalf of the government alleging fraud against federal programs and seeking to recover damages.
The new EO states that involvement in any racially discriminatory DEI activities is not only unethical and illegal, but also deemed fraudulent against federal programs because it is material to the government’s payment decisions. The definition of DEI activities here matters, as this EO expands a contractor’s obligations beyond the management of its employment policies and includes prohibitions against funding or expending time or resources on DEI activities and contracting with subcontractors, vendors, or suppliers utilizing DEI programs.
Read the full story...Reprinted courtesy of
Laura De Santos, Gordon Rees Scully MansukhaniMs. De Santos may be contacted at
ldesantos@grsm.com
Nomos LLP Partner Garret Murai Recognized by Best Lawyers in America
September 08, 2026 —
Garret D. Murai - California Construction Law BlogNomos LLP partner Garret Murai has been recognized in the 2027 edition of The Best Lawyers in America® in the area of Construction Law. Only about 5% of lawyers in the United States are recognized by Best Lawyers in America®.
Read the full story...Reprinted courtesy of
Garret D. Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Construction Robotics Works Where Variation Ends
August 11, 2026 —
Aarni Heiskanen - AEC BusinessBuiltWorlds published its
2026 Robotics Top 50 this summer, and the list is genuinely wide. Fifty solutions across nine categories, from 3D printing and prefabricated component manufacturing to earthmoving, demolition, material transport, layout, installation, inspection, and drilling. The honorees come from sixteen countries. It looks like robotics has finally spread across the whole project lifecycle.
However, having vendors in nine categories does not mean that contractors are robotizing their work en masse.
Zacua Ventures, in its
2026 construction robotics report, estimates that on-site robotics accounted for less than 0.03% of global construction spending in 2025. Zacua says: “That is not a failed market. It is a market at the beginning of an adoption S-curve”, while warning that its estimates rest on private vendor data and may be high if vendors overstate how widely their machines are deployed.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
Insured’s Bad Faith Claim Survives Summary Judgment
July 13, 2026 —
Tred R. Eyerly - Insurance Law HawaiiThe insurer’s motion for partial summary judgment to dispose of the insured’s bad faith claim was unsuccessful. Page v. State Farm Lloyds, 2026 U.S. Dist. LEXIS 102293 (E.D. Texas March 18, 2026).
Plaintiff insured alleged that hail and a windstorm caused damage to his property. The damage was reported to the defendant insurer. A claims adjuster inspected the property. Defendant then paid plaintiff $24,493.06, which was the total of the estimated damage minus depreciation and the deductible.
Read the full story...Reprinted courtesy of
Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
