Large US law firm apologizes for AI errors in bankruptcy court filing

By Sara Merken

Oct 24 (Reuters) - Marking the latest collision of artificial intelligence with attorney ethics, a large U.S. law firm told a judge it was "profoundly embarrassed" after one of its lawyers submitted a court filing with inaccurate and non-existent citations that were generated by AI.

Gordon Rees Scully Mansukhani, an 1,800-lawyer firm that had been representing a creditor in an Alabama hospital bankruptcy case, in a Thursday filing apologized to the judge and others involved in the bankruptcy. The firm said it has updated its AI policies to prevent against misuse and would accept any sanctions the court imposed.

Gordon Rees is the latest large law firm to be forced to explain itself in a case involving potential misuse of AI. Lawyers across the country, at firms of all sizes, have faced sanctions and harsh warnings for not vetting the technology's output.

Gordon Rees and some of its lawyers submitted the filings ahead of a hearing scheduled for Tuesday before U.S. Bankruptcy Judge Christopher Hawkins in Montgomery.

Hawkins in August had asked the firm and Cassie Preston, the lawyer representing creditor Progressive Perfusion, to explain why they should not be sanctioned after submitting a filing with what the judge called "pervasive inaccurate, misleading, and fabricated citations, quotations, and representations of legal authority."

Preston and a spokesperson for the San Francisco-founded firm, which says it is the only law firm with offices in all 50 states, did not immediately respond to requests for comment on Friday.

Jackson Hospital & Clinic and its bankruptcy lender Jackson Investment Group notified the court in August that AI may have been used to draft a Progressive filing that contained fabricated and mis-paraphrased material. At a hearing, the judge asked Preston if AI was used, and she said no, but withdrew the filing. The debtor and lender each later sought sanctions.

Preston and another Gordon Rees lawyer withdrew from the case last week. A lawyer representing Progressive, Joel Connally of Strength & Connally, said in an email that he is concerned that the firm's actions "have damaged my client's position with Jackson and those investing in its continued operations."

In a Thursday filing, Preston said that while she "did not personally use generative AI to prepare the filing, she was aware that generative AI was used." She said she would disclose "the source of this information" under seal or at a closed hearing.

Preston apologized to the court and said she had taken on "more work than she could reasonably do under the strain of difficult personal circumstances."

Gordon Rees in its response said it had reached agreements to pay more than $35,000 in attorneys' fees to the lender and more than $20,000 in legal fees to the debtors lawyers to account for the work responding to the AI errors. Lawyers for the debtors and the lender did not immediately respond to requests for comment.

The firm also said that it has put in place new education and training on AI risks and created a new "cite checking policy." It said that if the court decides that it should be sanctioned, "the law firm will understand the basis of the court's decision."