- 3 updates
Ambi Sitham told the court that she sat next to Rebekah Brooks at the meal in 2003 and that Brooks had suggested they keep in touch.
She told the jury she went to give her telephone number to Brooks.
"Piers [Morgan] turned to me and said 'Careful - she'll tap your phone'," she told the court.
Cross-examined by Clare Sibson, representing Brooks, Ms Sitham told the court she was "definitely a little bit concerned" by Mr Morgan's comment.
"I wasn't sure how serious the threat was," she added.
Brooks denies all the charges against her and the trial continues.
Media lawyer Ambi Sitham told the Old Bailey today that Piers Morgan "said to Rebekah [Brooks] that he already knew what her splash was going to be".
"He said 'I already know what your splash is, or your cover is, because I've been listening to messages'."
Asked by prosecutor Andrew Edis QC how Brooks responded, Ms Sitham said: "She retorted, 'been hacking into my phone again, have you, Piers?'
"He said something like, 'well you've been looking at my emails' or something. It was quite a quick back and forth of bantering, I just know what I heard.
Asked how they appeared, she said: "It was pointed. There was a pointedness to it."
Rebekah Brooks denies all charges against her and the trial continues.
The Old Bailey heard allegations that Rebekah Brooks and Piers Morgan exchanged banter at a dinner party about phone hacking.
American media lawyer Ambi Sitham said she overheard the conversation at a steak restaurant in 2003 where some 20 media professionals were celebrating Andy Coulson's birthday.
Speaking by videolink from the United States, Ms Sitham told the court that Brooks had asked Morgan if he had been "hacking into her phone again".
Brooks denies all of the charges against her. The trial continues.