Without-prejudice emails and AI confidentiality: what a settlement offer gives away in ChatGPT or Claude.
A without-prejudice email is the firm’s negotiating hand, written down. It is also a document lawyers labour over, which makes it a favourite for a second opinion from ChatGPT or Claude on tone and structure. The problem is what travels with the request: the offer, the reasoning behind it, the pressure points the firm intends to use, and in the internal draft, the figure the client will actually accept. This page marks every item in a settlement email that confidentiality and without-prejudice privilege protect, and shows how the same email is drafted on Ermos inside the firm.
The without-prejudice settlement email
Sent to the other side’s solicitors before conciliation or mediation, marked without prejudice, usually after a conference with the client.
To: Jonathan Pike, Merrow Chambers Lawyers (for Greystone Property Group)1
From: Eleanor Vance, Carrick Doyle Lawyers8
Subject: Soto v Greystone1: WITHOUT PREJUDICE SAVE AS TO COSTS
Dear Jonathan,
Our client is prepared to resolve the proceedings on the following terms, open until 5pm on 7 November:2
- Payment of $168,000, being twelve months’ salary, within 28 days of execution of a deed.2
- A statement of service in the form attached, and an agreed internal announcement that our client’s departure was by mutual agreement.3
- Mutual releases and confidentiality, with no admission.
We make this offer having considered the board minutes your client has produced. We note that the minutes record approval of a “finance function review” and not a redundancy, that the Financial Controller role advertised on 18 September carries substantially the same duties as our client’s former role, and that your client’s position on the 4 September meeting now rests on a single affidavit.4
Our client also holds contemporaneous material concerning Mr Whitcombe’s communications about the recognition of the Parramatta project loss in 2024. She has not relied on it to date and would prefer not to. Whether that remains the position will depend on how the proceedings are conducted.5
If the matter proceeds, our client will seek compensation, penalties and costs, and we will be inviting the Commission to draw the inferences available from your client’s selective production of documents.6
[Internal, delete before sending] Client’s instructions are to accept anything at or above $126,000 with the statement of service. Do not go below $110,000 without a further conference. Client is anxious about the Whitcombe material and may withdraw it if pressed; keep it as leverage only.7
Eleanor Vance8
An invented email, shown as the internal draft with its note still attached. Hover or tap any highlighted item for the analysis; the full list is below.
What leaves the firm
- 1The parties and their solicitors
Both sides, named, with the firm acting for each. The opponent’s solicitor’s name is a third party’s personal information. Rule 9 confidentiality guide.
Frontier Models (ChatGPT, Claude) Transmitted to the provider, generally offshore on personal plans Ermos Edge Stays on your instance in Australia; leaves only inside a permitted excerpt, per question, to the named provider Ermos Dominion Stays on the unit in your office - 2The offer
The figure, the terms and the deadline. Confidential, and protected as a without-prejudice communication, which is a protection that assumes it stays between the parties. Legal privilege guide.
Frontier Models (ChatGPT, Claude) The offer transmitted before the other side has seen it Ermos Edge Stays on your instance in Australia; leaves only inside a permitted excerpt, per question, to the named provider Ermos Dominion Stays on the unit in your office - 3The non-financial terms
The statement of service and the agreed story. What the client values most, which the other side can price accordingly. Rule 9 confidentiality guide.
Frontier Models (ChatGPT, Claude) What the client values most, transmitted Ermos Edge Stays on your instance in Australia; leaves only inside a permitted excerpt, per question, to the named provider Ermos Dominion Stays on the unit in your office - 4The reasoning
Why the firm thinks it will win. A privileged analysis of the opponent’s documents, handed to a third party in the course of improving a paragraph. Legal privilege guide.
Frontier Models (ChatGPT, Claude) Privileged reasoning; on consumer tiers it can train future models Ermos Edge Stays on your instance in Australia; leaves only inside a permitted excerpt, per question, to the named provider Ermos Dominion Stays on the unit in your office - 5The pressure point
A veiled reference to material about a named executive. The most delicate sentence in the email, and an allegation about a third party once it is outside the correspondence. Rule 9 confidentiality guide.
Frontier Models (ChatGPT, Claude) An allegation about a named executive transmitted Ermos Edge Stays on your instance in Australia; leaves only inside a permitted excerpt, per question, to the named provider Ermos Dominion Stays on the unit in your office - 6The threat
What the client will do if the offer is refused. Litigation strategy. Legal privilege guide.
Frontier Models (ChatGPT, Claude) Strategy transmitted Ermos Edge Stays on your instance in Australia; leaves only inside a permitted excerpt, per question, to the named provider Ermos Dominion Stays on the unit in your office - 7The internal note and the walk-away figure
The number the client will accept, the floor, and the fact that the leverage is soft. If this paragraph leaves the firm, the negotiation is over. It is the reason internal drafts never go into any external tool. Legal privilege guide.
Frontier Models (ChatGPT, Claude) The walk-away figure now on a third party’s servers Ermos Edge Stays on your instance in Australia; leaves only inside a permitted excerpt, per question, to the named provider Ermos Dominion Stays on the unit in your office - 8The partner
Ties the offer to a solicitor bound by rule 9 and by the Law Society’s guidance on AI. Law Society AI guidance.
Frontier Models (ChatGPT, Claude) Transmitted, and the leak is traceable to you Ermos Edge Stays on your instance in Australia; leaves only inside a permitted excerpt, per question, to the named provider Ermos Dominion Stays on the unit in your office
What happens in Frontier Models (ChatGPT, Claude)
- The whole document is transmitted to the provider’s servers. On personal plans the user cannot choose where it is stored or processed, and for the major providers that has generally meant outside Australia, under that country’s legal process. Some business plans offer storage in Australia, but the provider still receives the content.
- On consumer tiers, prompts can be retained and used to train future models.
- The provider’s staff and systems can reach the content under the provider’s own policies.
- Once sent, the firm no longer controls it. Retention and deletion happen on the provider’s terms.
The same document on Ermos
Ermos Dominion
The document is drafted on a unit in your office, from your own templates and the matter file. Every marked item stays on the unit, which keeps working with the internet switched off. Nothing in it is transmitted to an AI provider, so there is no disclosure to analyse: the confidentiality work is the same as for your file server.
Ermos Edge
Your documents, the index and your access boundaries stay on your own instance in an Australian data centre. When a staff member asks for this draft, only their question and the excerpts they are permitted to see go to a named Australian provider, who is contractually barred from keeping the content or training any model on it. Nothing is processed outside Australia.
| Frontier Models (ChatGPT, Claude) | Ermos Edge | Ermos Dominion | |
|---|---|---|---|
| Where the document is processed | Provider servers, generally offshore on personal plans | Your instance in an Australian data centre; answers generated in Australia | The unit in your office |
| Who can read it | Provider staff and systems, under policy | Your staff, within the boundaries you set. The named Australian provider processes only permitted excerpts, under contract, and keeps nothing | Your staff only |
| Is it kept | On the provider’s terms | Kept on your instance; the provider is barred from retaining it | Stays on the unit |
| Can it train a model | On consumer tiers, yes | No, by contract | Only your own unit learns from it, on your hardware |
Part of AI data leakage in law firms. See how this works in practice: Litigation work on Ermos.
Common questions
Do ChatGPT and Claude use the information in a without-prejudice settlement email?
Can we use ChatGPT or Claude for a without-prejudice settlement email if we remove the names?
Does deleting the chat remove a without-prejudice settlement email from ChatGPT or Claude?
How can a law firm use AI for a without-prejudice settlement email without sending it to ChatGPT or Claude?
Does without-prejudice privilege survive pasting into ChatGPT or Claude?
Why is the internal note the worst item?
How does Ermos help with settlement correspondence?
See Dominion answering from your own documents.
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