Is Copilot AI Private? Legal Considerations for Lawyers

AI is becoming every lawyer’s silent partner, but silence doesn’t always mean secrecy. As Microsoft Copilot weaves into daily legal workflows, the question is whether it’s safe for confidential legal conversations. 

We outline how Copilot manages prompts, responses, and document data in Microsoft 365. We discuss what its privacy settings cover and where the attorney-client privilege may be at risk. We also compare Copilot with the legal-specific AI Spellbook. Our goal is not to discourage AI use, but to provide facts that help you make informed, defensible choices for sensitive legal work.

Key Takeaways

• Enterprise Copilot offers encryption, compliance, and data isolation, while free and Pro tiers lack the contractual safeguards needed for confidential or privileged legal work.
• Non-enterprise Copilot plans process data in the cloud under general consumer terms, potentially exposing it through third-party access or misconfigured permissions.
• Built for transactional lawyers, Spellbook runs in Microsoft Word, protects client data with end-to-end encryption, and ensures full confidentiality for drafting, redlining, and review.

How Does Using Copilot Impact Attorney-Client Privilege?

Using Copilot can jeopardize the attorney-client privilege because confidentiality isn’t protected by default. Only Microsoft 365 Copilot for enterprise runs under the Data Protection Addendum (DPA) and Microsoft Product Terms, which keep data within the organization and prevent model training on user content. 

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Consumer tiers (including Copilot Free, Pro, and the standalone app) process prompts in Microsoft’s cloud under general terms, potentially leading to third-party disclosure or non-privileged access. Use Copilot for research or general drafting only, not for privileged client facts or documents.

Risks of Waiving Privilege

Waiving the attorney-client privilege can expose confidential information in court or during settlement discussions. When using non-enterprise Copilot versions, prompts and responses are processed under general consumer terms, which can lead to third-party disclosure and make sensitive content discoverable. 

If exposed, opposing parties could gain access to strategy, contract terms, or privileged correspondence, which increases ethical, legal, and reputational risks. Enterprise Microsoft 365 Copilot protects user data privacy through enterprise-grade security measures, but free or Pro tiers lack equivalent safeguards. 

To reduce risk, use a legal-specific AI tool such as Spellbook for secure, compliance-focused drafting, redlining, and review.

How Copilot’s AI Works and Its Data Sources

Copilot connects CoPilot’s large language models (LLMs) to your Microsoft 365 content and public web data. It uses Microsoft Graph to reference emails, chats, documents, and calendars that a user has permission to access, then combines that context to generate responses. For web queries, it uses Bing to ground its responses in publicly available, up-to-date information when necessary.

Copilot uses your internal data to generate responses. In Microsoft 365 enterprise environments, prompts and responses aren’t used to train Copilot’s foundational LLMs. Consumer tiers follow general Microsoft privacy terms without the same contractual guarantees, making them unsuitable for confidential legal work. 

In all cases, processing occurs in Microsoft’s cloud under organizational controls that protect sensitive information with encryption and controlled access.

Our complete review of contract review in Copilot has everything you need to know about Copilot’s ability to handle contract analysis in real workflows.

Copilot's Data Use Policy

Microsoft 365 Copilot includes Enterprise Data Protection (EDP). Under the DPA and Product Terms, Microsoft acts as a data processor, and prompts and responses aren’t used to train foundation models. 

Enterprise Copilot manages user inputs in compliance with Microsoft’s privacy policy within the Microsoft 365 cloud boundary, using encryption, tenant isolation, and role-based access controls aligned with GDPR and ISO/IEC 27018.

Copilot stores temporary data locally for processing without long-term retention, and deletes session data in accordance with enterprise retention policies. For web searches, it processes user queries anonymously to prevent identity association, while internal data queries remain identity-based to respect permissions.

Admins can use Microsoft Purview to set retention policies, apply sensitivity labels, and run audit logs. These safeguards give legal teams clear oversight of data use and storage for compliance and transparency. Even with these controls, user input is processed by external servers, which poses a risk of data leakage. 

Copilot’s Training Process and Your Data

In enterprise setups, Microsoft 365 Copilot does not use your prompts or documents to train its AI models. Your data is used solely to generate real-time responses.

Copilot runs in the Microsoft cloud, within the Microsoft 365 service boundary. It accesses only the emails, chats, and files that a user already has permission to view. It encrypts communication channels to prevent third-party interception and uses sign-in controls and tenant isolation to protect data.

Admins can manage chat history and monitor audit logs through Microsoft Purview. For legal work, avoid entering sensitive client details unless you’re certain your organization’s protections are correctly configured.

Risks of Data Leakage and Exposure for Lawyers

Even with Microsoft protections, using Copilot carries some exposure risk. Non-enterprise users lack contractual DPA protections and organizational isolation, significantly increasing their risk profile. 

Because data is processed in the Microsoft cloud, prompts and responses reside on external servers. Microsoft monitors systems for unauthorized access or potential data breaches, regularly reviews data-handling policies to comply with global requirements, and governs privacy through transparent, regulated practices.

But data protection isn’t absolute. Audit logs, legal reviews, or misconfigured SharePoint or OneDrive permissions can still expose sensitive information. For confidential work, use enterprise Copilot with strict administrative controls or a legal-specific tool like Spellbook.

For a side-by-side comparison of Copilot and other AI tools, see Copilot vs. ChatGPT: Privacy.

Who Can Access Your Chat History on Copilot?

In enterprise setups, Copilot saves your prompts and responses as activity history. IT or compliance teams can review it in Microsoft Purview when they have the correct permissions for audits, eDiscovery, or retention. You can also view or delete your own history in My Account.

Access is limited by design. Copilot uses role-based permissions, tenant isolation, and encryption in transit and at rest. Only authorized people can see or manage data.

However, note that default settings in consumer plans don’t include the same data isolation or compliance safeguards as an enterprise plan. Be mindful of what you share in those environments, especially if it includes sensitive or confidential information.

Privacy Differences Between Free, Plus, and API Versions of Copilot

Microsoft offers several versions of Copilot, and each tier comes with different privacy protections depending on how and where it’s used. Understanding these differences is key, especially when handling sensitive or client-related data.

• Free Version: Offers limited control with no guarantee that user data won’t be used for product improvement or model training. Not suitable for confidential or legal work.
  
  
• Copilot Pro: Adds privacy controls and allows limited customization, but still shares some interaction data with Microsoft services.
  
  
• API & Enterprise: Provide the strongest coverage and comply with GDPR, CCPA, and other major privacy regulations. Data is isolated in your organization.

The Free and Plus versions suit general use but lack contractual-compliance safeguards. Only enterprise and API tiers provide the security and privacy controls needed for legal or confidential work. 

Want a broader view beyond Copilot? See our roundup of the most private AI tools for legal work to compare options side by side.

Copilot Alternative: Spellbook’s Role in Data Privacy and Security for Lawyers

Spellbook is built for transactional lawyers who need AI that protects confidentiality while improving efficiency. Unlike general AI tools like Copilot, Spellbook runs entirely in Microsoft Word, ensuring client data never leaves your firm’s environment.

Designed for legal workflows, Spellbook focuses on compliance, confidentiality, and control. It uses end-to-end encryption and enterprise-grade security to safeguard every clause, draft, and redline. All actions are traceable, ensuring complete accountability.

Because it’s purpose-built for law, Spellbook restricts access to sensitive data, never trains on client information, and aligns with existing compliance frameworks. If your firm values security as much as speed, explore Spellbook today to draft, redline, and review documents with complete confidence and confidentiality.

Frequently Asked Questions

Is Copilot Safe for Confidential Conversations?

Unless you use an enterprise version with specific safeguards, Copilot isn’t ideal for confidential or privileged conversations. For legal matters, use a legal-specific AI like Spellbook to keep client data fully confidential.

Does Copilot Respect User Privacy Settings?

Yes. Copilot honors Microsoft 365 privacy settings, including disabling chat history and limiting optional data sharing. Admins and users can control retention and connected experiences via Microsoft Purview and account settings. That said, version and configuration matter. Some inputs may still be processed for service improvements, so avoid sharing sensitive data outside enterprise environments.

Does Copilot Store Your Personal Information?

Yes. Copilot saves prompts and responses as activity history. In enterprise setups, this data is encrypted, retained per admin policy, and not used to train foundation models. Review Microsoft’s privacy and retention policies to see what’s stored and for how long.