Why Using AI in Legal Filings Could Cost You Thousands in Sanctions ⚖

As artificial intelligence tools continue to flood the market, many business owners are experimenting with using AI for tasks like document drafting, research, and even legal filings. But a recent federal court case serves as a serious warning: using AI for legal research without oversight can lead to costly penalties and put your entire case at risk.

At our firm, we often work with creatives and entrepreneurs who are exploring cutting-edge technologies. However, it is essential to know when technology enhances your workflow and when it can backfire in a courtroom.

1. A $31,000 Lesson: What Happened in Federal Court

In a recent California case, two law firms were sanctioned $31,000 for submitting court briefs that relied on AI-generated legal research. According to the judge, the brief included false, inaccurate, and even completely fabricated legal citations, some of which did not exist in any legal database.

This misconduct not only embarrassed the lawyers but harmed their client's case. The judge denied the client’s discovery request, citing the use of misleading and fictional legal authorities. In addition to the sanction, the client was also ordered to pay the opposing side’s attorney fees.

2. The Problem with AI in Legal Research

The biggest issue? AI hallucinations. When asked legal questions, AI tools are designed to generate confident-sounding answers, even when the information is incorrect or fabricated. Without human verification, this leads to dangerous consequences in legal settings.

In this case, one attorney used an AI tool to outline a legal brief and passed that draft along to co-counsel, but nobody fact-checked the citations before filing. When the court flagged issues, the team resubmitted the brief but left in many of the same AI-generated errors.

According to the judge, this was "tantamount to bad faith."

3. Why This Matters for Entrepreneurs and Creatives

If you are running a business, you may be using AI tools in your day-to-day operations, including legal support. However, when it comes to legal filings, there is no substitute for a licensed attorney with real-world experience and proper legal research tools.

Submitting false information to a court, even unintentionally, can result in:

• Case dismissal

• Court sanctions and fines

• Damaged business reputation

• Delayed or denied relief

4. Final Takeaway: Use AI with Caution and with Oversight

We serve many forward-thinking business owners who use AI as part of their tech stack. But here is the bottom line: AI is not a lawyer. Even law firms that use AI responsibly are required to verify every claim before presenting it in court.

Failing to do so not only puts your business at legal risk; it can cost you money, time, and credibility. If you are involved in a legal matter, do not rely on AI-generated templates, research, or filings without professional review.

Need help navigating legal tools or avoiding legal landmines in your business? Contact our office today!

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Krystle Delgado, Esq.

CEO/Founder