Secretariat/ACEDS: 57% of Legal Professionals Cite Data Privacy as #1 AI Barrier

The 2026 Secretariat and ACEDS Artificial Intelligence Report found data privacy and confidentiality remain the leading concern for AI adoption at 57%, with hallucinations rising sharply to 46% — now ahead of cost (40%). For in-house legal teams evaluating outside counsel's AI use, these numbers translate directly into procurement and panel management requirements: 57% of respondents are worried about their own data, and they will increasingly ask the same questions of their outside counsel. For BD teams, the data privacy concern is a client relationship management issue — firms that can demonstrate data residency controls, client-specific security perimeters, and documented AI governance policies are materially ahead of firms that can only offer general assurances. The Harvey/Microsoft CELA relationship (client data stays in Microsoft's Azure perimeter) is the enterprise template that sophisticated in-house teams will now expect from their primary outside counsel.