AI Disruption by DeepSeek: Key Takeaways for Lawyers

Last week turned out to be a tough ride for everyone involved in the tech world. There was a huge decline in the prices of stock, and renowned names like OpenAi and Nvidia were questioned. Not only this, but the investors, executives, and policymakers across the US were caught off guard by a major disruption.
And do you know the reason behind this? DeepSeek – which is a little-known Chinese AI startup that came into the picture out of nowhere. This sudden and rapid rise of DeepSeek is proof that AI is taking over several things and is growing more and more each day.
However, despite the market chaos it caused,  there are a few valuable lessons that its story has to tell, especially for legal professionals who are trying to keep up with this ever-changing industry.

Knowing About DeepSeek & The Reasons For Its Popularity

DeepSeek is a Chinese AI startup that has recently shaken up the tech industry. This firm was founded by Liang Wenfeng in the year 2023. The company quickly gained attention with its AI assistant, making it one of the best Apple’s App Store apps. The best part? The app even surpassed OpenAi’s ChatGPT!
DeepSeek’s latest AI model – R1 makes it more significant. The company claims that this model performs at the same level that leading I models like OpenAI’s GPT-4 performs. But the only thing to be noted here is – it is done at a fraction of the cost.
While major AI companies spend billions on developing and running their models, DeepSeek reportedly built its V3 base model for just $6 million using Nvidia H800 chips. This efficiency of course has raised several questions and concerns among investors about the high costs U.S. tech giants have been investing in AI infrastructure.

Why Does it Matter?

For years now, AI has been dominated by big companies like OpenAI and Google. This is because these companies spend significantly on data centers and advanced chips. The AI race is all about who is able to afford huge investments. For instance, OpenAI along with its partners have committed at least $100 billion to their Stargate Project.

Is DeepSeek a Security Risk for Legal Professionals?

Do you know what is the biggest red flag about DeepSeek? It’s none other than its origin. Being a Chinese company, it operates under Chinese regulations which require businesses to share its data with government authorities whenever requested. This is the biggest setback for law firms. We know how law firms have all the confidential client information, which if leaked can create serious issues.

How DeepSeek Suffered a Cyberattack?

There is no denying in saying that DeepSeek saw quick success. Just within a couple of weeks, this chatbot became the most downloaded free app on Apple’s App Store. But no one knew what was coming.
On January 27, 2025, the company itself revealed that it suffered a large-scale cyberattack, causing it to limit new registrations. The cyberattack resulted in exposing millions of records which included user prompts and API authentication tokens.
This incident gives a lesson that security risks are involved with rapidly emerging technology. Legal firms should take lessons from this and should carefully elevate whether using AI models aligns with their compliance policies.

Potential Risks of Using DeepSeek

All the legal professionals considering this AI for lawyers should be aware of several risks:

• - If you use DeepSeek AI for sensitive legal work, it might expose confidential client data to unauthorized parties. This can further raise security and ethical issues.
• - If this legal technology does not align with strict data protection laws like GDPR in Europe and HIPAA in the U.S., your firm might have to face legal consequences.
• - Open-source AI models can create uncertainty around ownership, as third parties may alter and redistribute AI-generated content, potentially leading to disputes over authorship and rights.

How Can Law Firms Safely Use DeepSeek?

If you're considering DeepSeek for legal work, security should be a top priority. One way to minimize risks is by running DeepSeek’s AI on a secure, U.S.-based cloud platform like AWS Bedrock. This ensures compliance with strict U.S. data protection laws and adds an extra layer of control over sensitive legal data. But even with these precautions, don’t assume it's a perfect fix. Law firms should take a step back and conduct thorough risk assessments before diving in. Ask yourself:

• - Does DeepSeek align with your firm’s compliance policies?

• - How will confidential client data be handled and stored?

• - Are there any hidden risks that could impact long-term legal operations?

AI is a powerful tool, but using it responsibly is key. Taking the time to evaluate risks now can save you from bigger headaches down the road.

To Bring it All Together

Proceed with Caution! This is the lesson we learned after knowing about DeepSeek and the cyberattack it has faced. Of course, the chatbot’s open-source approach and cost-effectiveness have the power to transform your law firm agency, but it is crucial for you to first address all security and compliance concerns.
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