Hallucinating AI Strikes Again
The case of Lacey v. State Farm General Insurance Company garnered significant attention due to the misuse of AI-generated content in legal filings, leading to judicial sanctions.
Filed on June 20, 2024, in the U.S. District Court for the Central District of California, the lawsuit involves plaintiff Jacquelyn Jackie Lacey and defendant State Farm General Insurance Company, among others. The nature of the suit pertains to insurance, specifically a breach of contract under 28 U.S.C. § 1441.
During the discovery phase, a significant issue arose when the plaintiff’s legal team submitted a supplemental brief containing bogus citations. Approximately nine out of 27 legal citations were incorrect, with at least two references to non-existent cases. AI-generated research drafted the brief that caused the inaccuracies. The attorneys involved admitted to the oversight, expressing remorse and acknowledging the inappropriate reliance on AI tools without proper verification. As a result, Special Master Michael Wilner sanctioned plaintiff attorneys $31,100, combining litigation penalties against the plaintiff and financial payments from the involved law firms.
“Directly put, Plaintiff’s use of AI affirmatively misled me,” Judge Wilner wrote in a May 5 order. “I read their brief, was persuaded (or at least intrigued) by the authorities that they cited and looked up the decisions to learn more about them—only to find that they didn’t exist.”
This case underscores the importance of diligent verification when incorporating AI-generated content into legal documents. The incident serves as a cautionary tale, highlighting the potential pitfalls of uncritical reliance on AI tools in legal research and writing. It emphasizes the need for legal professionals to maintain rigorous standards of accuracy and integrity.
Implications for Legal Malpractice Insurance (LPL) Coverage
Insurers continue to monitor such cases and in response are starting to add AI exclusions to LPL policies.
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