Chat is ideal for online courses or those taught in a computer classroom. If you're teaching in a traditional classroom, you need to think about logistics. When will all of your students be able to log into a chat room? You might break them into groups and have each group decide when they'll meet. Also, consider whether chat rooms are more beneficial than simply getting together, or talking over the phone. If you don't have a goal for using chat, you might decide that traditional means for discussion are more convenient
Often, students complain that chats are overcrowded and that comments get lost in strings of confusion. For this reason, you might create several smaller chat groups and have them meet in different rooms. A useful feature of some chat rooms is the ability to save threads of conversation.
Since chats are informal, students tend to have difficulty staying on task. Chat rooms become a space to "hang out" in (especially if the instructor isn't involved). Also, you may run into students who offer unprofessional or offensive comments. To help prevent this, establish class rules for participating in chat before you assign it.
Some instructors like students to use pseudonyms when they're in a chat room. Anonymity encourages students to be more "open" with comments; but it also lends itself to more inappropriate comments.