The Legal Data Dilemma: Why Redaction and Legacy Encryption are Failing the Modern Firm

For decades, law firms have relied on two methods to protect sensitive matter data: the "black box" of redaction and the "vault" of full-file encryption.

But as firms race to adopt Generative AI and navigate complex digital workflows, these traditional methods have shifted from "sufficient" to "high-risk." Whether it is a high-profile redaction failure in a public court filing or a security protocol that prevents an AI from indexing a critical document, old tools are breaking future workflows.

Beyond the Vault and the Sharpie: Enter Selective Encryption

If redaction is a "permanent delete" and legacy encryption is a "lock on the front door," the modern firm needs a more surgical approach. The limitations of these binary methods, being either completely exposed or completely inaccessible, have created a critical security gap in the age of AI.

What is Selective Encryption in Legal Tech?

Selective Encryption is a data-centric security framework that cryptographically shields specific sensitive fields (such as PII, trade secrets, or privileged strategy) while leaving the rest of the document's context "in the clear."

Unlike full-file encryption, which renders a document invisible to AI, selective encryption allows Large Language Models (LLMs) to index, summarize, and analyze the context of a matter without ever "seeing" the restricted data. It is the only way to achieve AI-Readiness without compromising Data-Centric Zero Trust.

The Redaction Trap: When Covering Data Isn't Protecting It

Redaction is fundamentally a process of destruction. To secure a document, you must permanently remove or obscure its contents. As seen in the  2023 Sony/FTC leak, sensitive data can remain visible through digital "black marks" if not flattened correctly.

• The Problem: Redaction is reactive. If the original data exists "underneath" the digital layer, it is a liability. It also leads to "version sprawl" as firms create multiple sanitized copies.

• The Selective Encryption Fix: It protects data at the source. Sensitive info is cryptographically shielded at the character level. The document remains a single, authoritative version. Authorized users see the data; others see ciphertext. You aren't "covering" the data; you are securing its DNA.

The AI Governance Paradox: Utility vs. Security

Law firms are currently caught in a "Security Paradox" regarding Generative AI and Large Language Models (LLMs).

• Option A: Use full-file encryption. Result: The AI is "blind" and cannot provide insights or indexing.

• Option B: Decrypt files for AI processing. Result: Privileged client data and PII are ingested into the model, creating a massive confidentiality risk.

The Problem: Traditional encryption is "all-or-nothing." It forces firms to choose between AI utility and data security.

The Selective Encryption Fix: Selective encryption allows firms to shield only the "Crown Jewels", client names, dollar amounts, or privileged strategy, for example, while leaving the remaining document in clear text. This allows the AI to process context and deliver value without ever "seeing" sensitive data. It makes legal firms AI-ready without being AI-risky.

The Workflow Wall: Why Security Fails at the Attorney’s Desk

The graveyard of legal tech is filled with robust security tools that attorneys simply refused to use. Most encryption fails because it creates "friction": it changes file extensions (from .docx to a proprietary format), it breaks the iManage or NetDocs integration, and it makes mobile review impossible. 

The Problem: If a security measure adds three extra clicks or requires a separate login, attorneys will find a workaround. This leads to "Shadow AI" and data sprawl as teams move files to personal devices or unprotected cloud folders just to get the work done.

The Selective Encryption Fix: Modern selective encryption is designed to be invisible. By maintaining the native file format (.docx, .xlsx, .pdf, etc.), the protection travels with the file without disrupting the DMS or the email chain. The attorney operates exactly as before, but the sensitive fields remain protected by DARPA-proven cryptography.

The New Standard: Data-Centric Zero Trust

It’s clear that a law firm's "perimeter" has dissolved. Data now flows continuously among the DMS, M365, external counsel, and AI pipelines. This means relying on "black boxes" or "vaults" is no longer enough. The firms that will lead the next decade are those that move security from the folder level to the field level - ensuring that no matter where a document goes, the most sensitive information stays secure, usable, and under the firm’s control.

Are You Ready for the AI-Driven Firm?

The choice is no longer between security and utility. In 2026, the competitive advantage belongs to the firms that can safely feed their data into AI pipelines without risking a headline-making leak.

Ready to stop Relying on 20th-Century Security for 21st-Century Workflows? Discuss your firm’s specific data-privacy challenges with our team.

Quick Summary: Selective Encryption FAQ

How does Selective Encryption differ from Redaction?

Redaction permanently removes data or "covers" it, which can be bypassed or lead to version sprawl. Selective Encryption secures data at the source, allowing authorized users to see it while unauthorized users and AI models see only encrypted ciphertext.

Can AI still read documents that use Selective Encryption?

Yes. Selective Encryption shields only the "Crown Jewels" (PII/Privileged data) while leaving the rest of the text in the clear. This allows AI to provide summaries and analysis without ever seeing or "learning" sensitive information.

Does Selective Encryption work with iManage or NetDocuments?

Modern selective encryption maintains the native file format (.docx, .pdf), ensuring it integrates seamlessly with existing Document Management Systems (DMS) without disrupting attorney workflows.